Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

Only 1% of UK Default Pensions are in Private Credit

• ABI and Pensions UK released the first progress update on the UK’s Mansion House Accord.

  • Private credit exposure is £3.6bn of £22.1bn in private markets, less than half of property’s £8.3bn.

  • Insurers see private credit an emerging growth area, alongside infrastructure and real estate.

  • Consultants’ focus on fees vs. returns is the biggest barrier to more private-market investment.

• 👉 Mansion House Accord Update

Most investors expect defaults to rise in the next six months

👉 PitchBook: Global Private Credit Survey

Manager Updates

• Ares: The Allocator’s Playbook for Private Market Due Diligence. Link

• Blackstone reported $35.8bn of inflows into Credit & Insurance taking the division’s AUM to $480bn, up 11% year-on-year. Total firmwide AUM reached approximately $1.37tn. Blackstone Q3 Earnings

• Golub Middle Market Report: U.S. Middle Market Earnings Grew 7% in Q3 2026. Link

• Partners Group raised $510 million from a group of US-based insurance companies for its second rated feeder vehicle of 2026. The vehicle enables the insurers to invest in Partners Group’s evergreen private credit strategy while benefiting from immediate capital efficiency, due to the fully paid-in nature of evergreen funds, as well as reduced capital charges. Link

Partnership Updates

• Carlyle partnered with Basic Capital, the technology-driven retirement platform to bring Carlyle’s private markets investment strategies to 401(k) and other defined contribution plans. The firms will create several collective investment trusts that will be available on Basic Capital’s open-architecture platform. Link

Half of top-quartile funds fall below median within two cycles

👉EQT: The New Rules of Capital

CVC published an update on European direct lending. Below are my highlights:

👉 Read the full report here

Europe shows significantly lower private credit adoption than North America

• Over the past decade, private credit has become a mainstay allocation in institutional portfolios and a primary financing source for mid-market companies.

• While that trend is now plain to see, what is perhaps less widely recognised is how much growth potential remains – particularly in Europe, where adoption still trails the U.S. by a wide margin.

Direct lending has delivered strong risk-adjusted returns

• Direct lending’s risk-adjusted returns remain more attractive than those of other areas of leveraged credit, even after adjusting for the smoothing effect of quarterly reporting, which can lead to lower reported volatility in less liquid assets

• Its correlation with the traditional 60/40 portfolio is also markedly lower.

Software as a share of private debt issuance by region

• The concentration of software in some private credit portfolios, particularly in the U.S., has become the focal point of bearish media headlines this year. On the headline numbers alone, the U.S. BDC universe seems to warrant some scrutiny

• Software as a share of total private debt issuance over the past five years has been noticeably lower in Europe at 10.9% than in the U.S. at 17.6%.

• The potential for AI disruption is not uniform across the sector. Vulnerabilities vary considerably by business model, depth of customer integration, and switching costs

For many investors, the question today is not whether to allocate to direct lending, but how best to implement that exposure and with which manager.

👉 Read the full report here

💰Fundraising News

Arini’s $4bn Inaugural Direct Lending Fund

Arini, a London-based credit manager, announced the final close of its inaugural Direct Lending Fund I. The fund makes senior secured loans to European founder-led, family-owned, and sponsor-backed businesses. It will target more than $4 billion of deployment.
👉 Arini Announcement

Northwind’s $1bn Debt Fund III

Northwind Group, a New York-based real estate manager, closed its $1 billion Fund III. The fund provides senior bridge loans in major US gateway markets including New York City, South Florida, Los Angeles, and Chicago. It is the largest fund in the firm’s history.
👉 Northwind Announcement

Foundation Credit’s $540m Infrastructure Debt Fund II

Foundation Credit, a US infrastructure debt manager, closed its $540 million Infrastructure Debt Fund II. The fund provides debt to the local US middle-market infrastructure sector across transportation, water and wastewater, sustainable, social and smart infrastructure.
👉 Foundation Credit Announcement

Ascertis Credit $700m Fund IV Second Close

Ascertis Credit, a Singapore-based credit manager, announced a second close of $700 million for its Fund IV. The fund invests in performing private credit in Asia ex-China, focused on India, Singapore and Southeast Asia.
👉Ascertis Credit Announcement

Amundi’s $180m Senior Private Debt V

Amundi, a Paris-based asset manager, announced a first close of $180 million for its Senior Private Debt V. The Article 8 fund makes sustainability-linked senior secured loans to European mid-sized companies with EBITDA of €15-50 million.
👉 Amundi Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

👋 Hey, Nick here. You’re reading the 2nd Edition of Three Questions with The Credit Crunch.

I’m delighted to welcome Patrick Marshall as this week’s guest. Patrick is CIO & Head of Private Credit at Federated Hermes. He is responsible for the day-to-day management of the direct lending funds, and he oversees which transactions to put forward for investment by the funds.

Federated Hermes is a global active investment manager providing investment solutions across equities, fixed income, liquidity, and private markets. As of June 30, 2026, Federated Hermes managed approximately $912 billion of assets, alongside $2.3 trillion of assets under advice through its stewardship business.

Federated Hermes’ Private Credit platform invests across European direct lending, real estate, and other private credit strategies, with approximately $3.4 billion of assets under management as of June 30, 2026. Its Direct Lending strategy focuses primarily on senior loans to UK and European mid-market companies, supported by an origination model built around relationships with European banks and financial sponsors.

1. Where do you see the market making mistakes right now?

There is a lot of dry powder chasing a limited number of quality deals in the market. With some direct lenders needing to deploy, the market has become very aggressive for companies operating in popular sectors of the economy. This has led to aggressive transactions, where Federated Hermes feels the risk is not appropriately priced, and where lenders are not benefiting from the usual protections. A number of these aggressive transactions were undertaken in 2020 and 2021, and these loans are now being restructured as borrowers have struggled to meet expectations under the weight of aggressive leverage levels at a time when the economic outlook has softened.

What opportunities does this open up?

The more aggressive lenders of the past few years are now having to deal with internal portfolio issues, such as defaults or restructurings, and are therefore not able to focus on deployment. This has meant that managers who have stayed disciplined and adopted conservative lending strategies in the past are now benefiting from less competition to deploy in the current market. We anticipate that the more established players — those who can afford to wait, or who source enough transactions to remain selective and disciplined — will be well positioned to seize the most attractive opportunities going forward, although, with a number of risks on the horizon, this will remain a market where the disciplined lender will outperform the more aggressive lenders.

2. What have you changed your mind on in the last year?

The Direct Lending market has become increasingly crowded, but there remains significant opportunity the provide financing to lower-middle-market companies in Western Europe with more complex financing requirements — across the capital structure – and generate attractive returns. There may be businesses with a certain history, in segments that aren’t particularly popular, or with some other aspect that makes financing more challenging. These types of opportunities could be attractive if the lender really understands the business and is experienced at dealing with these types of companies.

3. What advice would you give investors navigating difficult portfolio situations?

In the current market environment, we are seeing an increase in defaults, and I would suggest that hiring in-house restructuring experience is essential. Over the last 18 months, investors have increasingly been asking questions about lenders’ in-house restructuring knowledge to reassure them that their recoveries are maximised in the event of distress in the portfolio. This concern has become more acute, and those relying on external restructuring resources may struggle to raise further capital. At Federated Hermes we only hire people with experience of dealing with restructuring so that if the team must deal with a difficult situation, we are able to deal with it inhouse rather than being a forced seller because the expertise isn’t available to maximise recovery for our investors.

What bad advice do you hear repeated most often?

That bigger is always better. A number of direct lenders are chasing AUM and raising mega funds – and this has forced the direct lender to migrate away from the real mid-market towards the large cap market (with all the risks that the large cap market presents) in order to deploy, because mid-market loans are too small to deploy a full mega fund. In many cases performance has suffered, as managers have become less able to pick the right credits to deploy. Managers with smaller funds can maintain their focus on the real mid-market and also can be more disciplined in who they lend to as they have less pressure to deploy.

Finally, I would also say that it always very worrying when a lender says that “this time it’s different” when discussing the state of the market and why it is acceptable to provide very aggressive structures to borrowers. History has shown that disciplined lending always pays off in the longer term.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• Apollo: The Strategic Case for Allocating to Asset-Backed Finance

  • 👉Apollo: ABF

• PitchBook: US Private Credit Monitor

  • YTD volume runs 16% behind last year’s pace, while deal count trails by 10%

  • The BSL–direct lending spread gap has widened to 166 bps over the past three months, up 43 bps from Q1 2026.

  • Direct lending accounts for nearly half of US private debt capital raised over the trailing 12 months.

  • 👉 PitchBook: US Private Credit Monitor

• PitchBook: European Private Credit Monitor

  • Direct Lending is down 16% compared to 2025, although Q3 was the highest quarterly volume so far in 2026. The year-over-year level.

  • YTD in Europe, all direct lending LBOs have priced with new issue spreads under 600 bps

  • None of the 10 largest direct lending deals were done in 2026

  • 👉 PitchBook: European Private Credit Monitor

• Moody’s: the real default rate is 5.8%, not 4%

  • About 17% of these borrowers pay some interest in kind (PIK).

  • Business services, consumer services and software account for half of all defaults.

  • Maturities peak in 2028. Borrowers rated Caa (deep junk) or account for over half of the 2027–28 maturities.

  • 👉 Moody: Private Credit Assessment

Manager Updates

• WhiteHorse Capital is pursuing a credit secondaries transaction involving its publicly traded BDC. The transaction would transfer all assets from the BDC, WhiteHorse Finance into a closed-end continuation vehicle backed by private credit secondaries investors. Link

• Blue Owl is planning a ‘big push’ into insurance. “We are not managing enough capital…. We’re realising that if we had a bigger pool of capital, meaning insurance capital, we could provide really unique solutions . . . It’s something we’re going to make a big push in.” Link

• Victory Park Capital has partnered with Tradable to launch VALTS, a tokenized feeder fund providing qualified US investors access to its private asset-backed credit interval fund via the Stellar blockchain. The fund will offer monthly income distributions in stablecoins, expected quarterly liquidity, and the ability to transfer tokens between pre-approved investors. Link

Partnership Updates

• Orion Infrastructure Capital partnered with Liberty Mutual Investments to launch a new Credit Income Strategy focused on middle market infrastructure debt opportunities. The partnership gives LMI the option to deploy up to $750 million of capital with OIC’s infrastructure platform. Link

• Benefit Street Partners partnered with Encina Lender Finance to expand its ABF platform. BSP acquired an initial $480 million portfolio originated by Encina. In addition, a 14-person investment team from Encina joined BSP and will continue to manage and originate investments through the strategy. Link

• Goldman Sachs partnered with Phoenix Financial, an Israeli asset manager, to deploy more than $4bn (£3bn) across global private credit opportunities. The deal will see the firms collaborate on investments across corporate credit, asset-backed finance, real estate and infrastructure debt. Link

How Long Does it Take to Exit Non-Traded Private Credit Funds?

A redemption queue doesn't mean capital is lost. Here's how long investors may have to wait to get it back.

• Ares: Private Credit Outperformance Depends on How You Measure It

  • Benchmark choice and measurement method can materially affect conclusions about private credit performance.

  • Widely circulated recent research compared drawdown-fund multiples with buy-and-hold ETF returns.

  • Measuring in this way ignores the timing of capital calls, distributions, and residual value.

  • Ares cash flow based benchmarking found that private credit performance diverges meaningfully from the Hooke et al. (2025) results when using the same benchmarks but accounting correctly for cash flow timing.¹

  • The median vintage IRR was 7.6%.

  • This shows a vintage Direct Alpha of 3.3% per year vs. a public loan comparable.

  • 👉 Ares: Cash-Flow-Matched Benchmarking

• BlackRock Quarterly: Private Credit Returns are Falling

  • Tighter spreads and higher unrealized losses have been a considerable headwind

  • BlackRock expects unrealized losses to come down. A Cliffwater analysis of prior stress periods found that subsequent realized losses equaled roughly half of preceding unrealized losses, as some markdowns ultimately reverse.

  • BlackRock Credit Quarterly

💰Fundraising News

M&G’s UK LTAF

M&G, a UK-based investment manager, launched its first LTAF, with initial commitments of ~$100 million. The fund allows UK defined contribution pension schemes to invest in private credit and aligns with the ambitions of the Mansion House Accord.

👉 M&G Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• KKR: Q3 2026 Market Review

  • California has a history of rewarding those willing to look beneath the surface. Gold in the rivers and oil beneath the ground. Each resource triggered a rush of capital, but the enduring value was rarely created by the natural resource alone. Much of it accrued to those who supplied the tools, financed the claims, and built the roads, railways, and pipelines that turned discovery into an economy.

  • Investment in that infrastructure transformed what lay beneath the ground into an asset, a stream of cash flows, and ultimately something a balance sheet could capture.

  • 👉 Read more here

• Brookfield: Credit Quarterly:

  • Four years after the sea change in interest rates began, the tide hasn’t reversed. The rate hikes of 2022 weren’t just a blip in a multidecade yield compression trend—they initiated a fundamental repricing of capital.

  • Expected rate cuts have not materialized and government bond yields are well above 2022 levels, with the U.S. 10-year Treasury yield recently crossing the symbolic 5% threshold.

  • Elevated rates therefore continue to shape the market environment, creating a richer opportunity set for credit investors but also a heavier burden for borrowers. The latter is manifesting in clear dispersion in the fates of weaker and stronger borrowers.

  • It appears this is the ‘‘new normal’’ for interest rates, but what does it mean for credit investors?

Manager Updates

• 🎧🎧Recommended Listen: Former Google CEO Eric Schmidt speaks to Blackstone about AI. Link

• Apollo extends Daily Pricing across various direct lending, asset-backed finance, multi-credit and opportunistic credit vehicles. So far The trading desk has handled around 500 assets with 160 counterparties. Link

• BC Partners Credit commits up to $300m to fund LIV Golf restructuring

Partnership Updates

• SMBC and Ardian, a Paris-based private markets firm, partnered to launch a NAV financing platform. The partnership brings together two complementary strengths in NAV financing. SMBC has a long-standing track record in the large-cap segment, with deep structuring expertise and a strong global franchise. Ardian, through its Secondaries & Primaries expertise, brings mid-cap insights, local market access, and proprietary data on private market assets. Link

• StepStone partnered with ASB Capital, a Dubai-based wealth manager, to launch a Shari’ah-compliant private credit vehicle. The open-ended fund will invest in US middle-market loans and is aimed at institutional and sophisticated investors globally. Link

What does it take to 10x your money?

Many financial advisors talk to their clients about how to double their money, but Ares believes few speak in terms of growing wealth by 10x, perhaps because it seems unattainable.

Ares belives the rate and consistency of annual returns that private market funds, particularly private equity, seek and obtain may help make that 10x mindset a reality.

👉 Ares: What does it take to 10x your money?

Things could get messy in software

Recent difficulties refinancing software deals in syndicated markets hint at discomfort ahead, particularly for those SaaS platforms originally underwritten with aggressive (i.e., >15x recurring revenue) enterprise value assumptions

Ytd Reduction in 2028 Maturity Wall

👉 Carlyle Financing AI without a SaaS repeat

Where Insurers Plan to Add vs. Reduce Risk Over 12–24 Months

• KKR surveyed 50 U.S. insurers representing nearly $2.6 trillion in assets under management.

• Insurers plan to increase their exposure across every private credit category

👉KKR’s 2026 Insurance Report

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💰Fundraising News

Audax Private Debt $10bn Direct Lending Fund III

Audax Private Debt, a New York-based manager, closed its $10 billion Direct Lending Fund III. The fund will lend to sponsored North American companies, typically with $15 million to $75 million of EBITDA.

👉 Audax Announcement

Centerbridge’s $4 billion Special Credit Partners V

Centerbridge Partners, a New York-based investment manager, raised $4 billion for its Special Credit Partners V.

👉 PEI Private Credit

Oaktree $2bn ABF Fund

Oaktree closed its debut Asset-Backed Finance Fund with $2 billion of commitments. Oaktree’s ABF strategy focuses on providing capital to originators across a range of sectors including equipment leasing, transportation, consumer, real estate and infrastructure.

👉 Brookfield Announcement

Blackstone $1 billion Continuation Fund

Blackstone raised a $1 billion continuation vehicle for its Capital Opportunities Fund IV, which completed fundraising in 2022. Allianz Global Investors and StepStone reportedly lead the transaction. The original fund has a reported net IRR of 11%.

👉 PE Wire

Nuveen $660m Australian CRE Debt First Close

Nuveen, a New York-based asset manager, announced a first close of more than $660 million for its Australian commercial real estate debt strategy. The core-plus strategy provides structured senior and junior loans with modest leverage and financial covenants, with a preference for urban industrial and logistics and residential assets.

👉 Nuveen Announcement

Fidelity Investments $451m Real Estate Opportunity First Close

Fidelity Investments, a Boston-based asset manager, closed its $451 million Real Estate Debt Opportunities Fund II. The fund invests primarily in US private commercial real estate loans across property sectors, with flexibility to buy tradeable real estate debt. Its mandate includes middle-market subordinated and mezzanine loans, originated financing, and secondary loan purchases.

👉 Fidelity Investments

BlueOrchard $300m Emerging Markets First Close

BlueOrchard, a Switzerland-based impact manager, announced a first close of $300 million for its launched emerging-markets private debt vehicle. The evergreen strategy is managed by BlueOrchard, part of Schroders, and is designed to channel institutional private debt capital into emerging-market companies.

👉 BlueOrchard Announcement

Corre Partners $220m First Close

Corre Partners, a US-based opportunistic credit manager, announced the first close of Horizon III with $220 million raised. The fund has a $500 million target and a $650 million hard cap. It invests in opportunistic credit in middle-market companies facing temporary financial pressure or undergoing a turnaround. Its predecessor, Horizon II, reported a net IRR of 24.7 percent and a net MOIC of 2.4x as of 30 June 2026.

👉 Corre Partners Announcement

HMG European Private Real Estate Debt Fund VI

HanseMerkur Grundvermögen, a Hamburg-based real estate manager, launched its sixth real estate debt fund, Private Real Estate Debt Fund VI, with a target of ~$560m million. The fund will provide whole-loan financing to commercial and residential property developers across Europe.

👉 HMG Announcement

Partners Group Global Multi-Sector Private Credit Income

Partners Group launched a new Global Multi-Sector Private Credit Income Strategy through an open-ended evergreen vehicle for institutional and private wealth investors. The strategy combines senior direct lending, credit secondaries, fund financing, royalties, opportunistic credit and liquid credit across Europe, North America and Asia-Pacific, targeting high-single-digit to low-double-digit returns.

👉 Partners Group Announcement

Ares Management raised approximately $4.2 billion for its inaugural Ares Global Structured Solutions Fund and affiliated vehicles, more than four times its original $1 billion target. The strategy sits within Ares’ secondaries business and provides preferred equity and bespoke capital to private-market managers, including financing GP fund commitments, seeding new strategies through structured LP commitments and supporting succession transactions. It is not conventional corporate direct lending, but it fits your capital-solutions / GP-financing universe. Ares Management

👉

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online.

For all the noise around private credit, fundraising continues to tell a much more resilient story. Year-to-date fundraising is up 27% compared to last year. This increase alone is four times as large as the total BDC redemption requests everyone’s been banging on about.

But it’s not all up and to the right. LPs are becoming much more selective, concentrating capital into fewer funds. New, niche, and subscale strategies have been hit hardest.

As Partners Group wrote:

Private credit is now entering a new normal defined by greater bifurcation and wider dispersion of returns.

In a more differentiated market, selectivity becomes the primary driver of returns.

North America Pulls Away

US private credit fundraising grew 40% year on year, with the increase almost entirely driven by the largest funds. Funds larger than $10bn raised six times as much capital compared to the same period last year.

Unlike the US, Europe’s growth has been muted. The number of funds raising fell around 25% year on year, leaving larger average fund sizes to drive the increase. Year to date, nearly twice as many US-based funds have raised capital as European funds.

Asia’s private credit fundraising momentum continued in Q3. Ares and Partners Group both announced notable funds in the quarter.

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The Five Largest Funds in Q3 Raised 50% of the Capital…

1. Hayfin’s $17.2 bn Direct Lending Fund V

2. ICG’s $14 bn European Corporate Fund IX

3. Arctos $6.2 bn Keystone Partners Fund I

4. Tikehau’s $6 bn European Direct Lending VI

5. Bridgepoint’s $5.9 bn Direct Lending IV

We’re a winner, but not everybody has had the same experience

It is a tough fundraising environment. We’re fortunate that if you look at our institutional business, we’re basically — have almost double last year’s production through six months... That’s not every GP...

We’re a winner, but we recognize that not everybody has had that same experience.

Jim Zelter - President of Apollo

Funds larger than $10bn are the only segment of the market growing this year. Every other fund-size category has declined in both the number of funds raised and total capital raised.

Sub-$500m funds have been hit particularly hard, where fewer managers are raising capital, albeit in slightly larger vehicles.

📕Nick’s Top Articles for Q3

1. Apollo: The AI Buildout Is Reshaping Credit Markets

2. The State of Private Credit in H1 2026

3. Evercore: Credit Secondaries Are Accelerating

4. Three Questions with Stepstone

5. Ares on the Financial Engineering Behind the AI Boom

Secondaries are the fastest-growing strategy

More credit secondaries funds have closed this year than in the previous three years combined.

Ares’s $7.1 billion Credit Secondaries fund is in a league of its own, at more than twice the size of its nearest rival. Pressure to generate DPI has fuelled a sharp increase in continuation fund fundraising, with Crescent Capital’s $3.2 billion the largest example this year.

Despite the rapid growth, credit secondaries remain a small part of the overall direct lending market, as Carlyle has highlighted. Evercore expects that gap to narrow as the strategy continues to scale over the next several years.

Direct lending remains the largest fundraising strategy, but growth is increasingly concentrated at the top end of the market. Six of the ten largest Q3 funds were direct lending vehicles, while the number of sub-$1 billion funds fell 40% year on year.

The Changing Shape of Private Credit Fundraising

This isn’t a Q3 update, but it’s a good excuse to use one of these grey boxes.

Looking back at the fundraising mix since I started tracking the market highlights just how much private credit has changed:

1. Direct lending has recovered from its Q3 2025 low, but remains well below its Q3 2024 peak.

2. Investor appetite for opportunity funds appears to be cooling.

3. Secondary funds have grown every quarter without fail.

It Feels Like There’s Indigestion

Hyperscaler data center spreads have widened pretty meaningfully just over the last couple of weeks. That stands in contrast to the broader IG markets, which, again, still pretty much remain at their tight. And we’ve had year-to-date this flurry of jumbo deals. I saw a note a day or two ago. I think we’ve had more $25-plus billion deals year-to-date than the last five or six years combined. And so, it does. It feels like there’s indigestion.

Craig Larson - Head of IR KKR

No market update in 2026 would be complete without mentioning AI and data centers.

As Apollo put it, the AI Buildout Is Reshaping Credit Markets.

For anyone trying to make sense of the scale and the risks of the boom, the latest In the Gaps by Ares is the best white paper I’ve read on it.

🏆 Nick’s Funds of the Quarter

🇪🇺 ICG’s $14 billion Europe Fund IX

ICG announced a final close of ~$14 billion for its Europe Fund IX. The flagship European Corporate strategy will target 15-20 investments in Western Europe across middle and upper-middle market companies, with deal sizes ranging from EUR 250 million to EUR 1 billion. The investments are generally industry-agnostic and will include a blend of debt and equity-like investments.

💻 Claret Capital’s $670 million Fund IV

Claret Capital, a London-based manager, announced the final close of its Fund IV. The fund invests in technology and life science businesses across Europe and globally.

🚜 Homestead Capital’s $350 million US Agriculture Fund

Homestead Capital, a San Francisco-based investment manager specialising in US agriculture, announced the first close of its inaugural commingled private credit strategy. The fund originates senior secured loans to agricultural borrowers across the United States, collateralised primarily by farmland and other agricultural assets, addressing financing needs underserved by traditional agricultural lenders.

This newsletter is for educational or entertainment purposes only. It should not be taken as investment advice.

Last week’s In The Gaps Newsletter is hands down the best thing I’ve read this year. If you’re short on time, you can read my highlights below, but I’d thoroughly recommend you read the full report here

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• Pitchbook: $12 billion of direct-lending deals have been refinanced in the syndicated loan market so far this quarter, the highest amount since LCD began tracking this data in early 2022. Link

• BlackRock: YTD direct lending deal volume is only modestly below 2025. Link

Manager Updates

• Goldman Sachs is the lead bidder for $37bn credit manager Palmer Square. Palmer Square has built a substantial presence in CLOs, with its CLO platform representing around $27bn. An acquisition would give Goldman an opportunity to significantly increase its scale in the CLO market. Link

• Partners Group is exploring a €800m private credit continuation vehicle. Link

Partnerships

• Sixth Street announced a partnership with the UK bank Lloyds to provide funding for the UK’s commercial real estate sector. The agreement will allow Sixth Street’s global Asset Based Finance platform to provide financing solutions for UK property borrowers. Link

• JPMorgan and Qatar Investment Authority are establishing a $5 billion partnership focused on providing senior financing to middle-market companies in the U.S. across sectors, with a focus on industrials, services, healthcare and technology. Link

• Blackstone plans to set up a new insurance vehicle at Lloyd’s of London. Link

• KKR and Doha Bank are exploring a partnership that will give Qatari investors access to KKR’s private markets strategies. Link

BDC Redemptions Q3 26 Update: Week 4

Last week saw Apollo and Ares announce Q3 redemptions:

• Both managers received above-average redemption requests of 14.7% for Apollo and 13.1% for Ares.

• Q3’s weighted average redemption request is 11.6%, down ~1 percentage point vs. last quarter.

• Requests for both managers were lower than Q2. Apollo’s fell 2.1 percentage points, and Ares fell 1.3 percentage points.

• Both managers capped redemptions at 5% above.

CONTEXT THE MEDIA MISSES: BDC redemptions are increasingly being presented as a read-through for the entire private credit market. If you step back, the data shows a different picture: redemptions remain well below total market fundraising.

I’ve tracked nearly $100 billion of private credit fundraising this quarter, more than six times the $16 billion redeemed from BDCs this quarter.

Before you skim my highlights, do yourself a favour and read the whole report. You’ll thank me later.

👉 Read Ares: In The Gaps

All of the risk converges on just eight names

• Much has been made of the circular and interconnected relationships inside the AI, data center and chip markets.

• Ares endeavored to add a dimension to that discussion by asking a narrower question:

  “on a look-through basis, who is ultimately on the hook for all these financings?”

Venture capital may turn this into a potentially calamitous risk

• The people who run these companies, and the sponsors behind most of them, follow venture’s standard operating procedure: bet the farm, repeatedly.

• What passes for a coherent, conventional way to build and scale a technology company is a very strange thing to find underneath a bond that an insurer bought to fund a retiree’s annuity, at an investment grade spread.

• Insurance is looking to pick up 50-100 basis points of excess spread while venture is looking to make 50x to 100x on their money.

  

Is it debt or is it equity?

• The sponsor can now borrow against its stake in the JV, typically funding 80–100% (usually 90%+) of its investment with debt. This debt is typically held by its affiliated insurer, serviced by the JV's dividends.

• Because of the corporate guarantee, the debt can be rated at, or a notch below (often higher than), the corporate itself.

• From a corporate perspective, the underlying instrument is engineered to behave like equity, while from a sponsor perspective the instrument is engineered to behave like debt.

• At closing, the guarantee sits off the corporate's balance sheet; it is deemed a contingent liability, out-of-the-money, and not yet "probable." So corporate leverage ratios and the rating are untouched. Its existing lenders and shareholders enjoy the benefits of an equity label.

Securitization is like fertilizer. You can grow tomatoes or blow up buildings

• Under normal, base case scenarios, both of the investments (corporate and JV) can appear as perfectly sound investments.

• Each is engineered to be resilient along the risk axis for which it was designed: the corporate’s leverage or the sponsor’s credit rating.

• Each, however, possesses a critically important risk factor that sits quietly off to the side. When that risk triggers, equity becomes debt, or debt becomes equity…

• The consequences can be very material. For insurance balance sheets which are typically levered 12:1 (or more), the designation of debt (vs. equity) has major consequences from a capital perspective.

Sitting in an investment committee meeting should never feel like sitting at a poker table. Serious credit investing involves knowing exactly what you are holding (as collateral, rights, controls, protections, etc.), and knowing that it’s a winning hand to a high degree of certainty because you know what everyone else is holding.

Should all of this enthusiasm cool - what, exactly, would we be holding?

• In one case, the equity was really debt; in the other, the debt was really equity. The support did its job. It simply protected a different party than the label implied, and the other side paid for it

• Creditors in this system are left holding a single purpose building that has been rejected by one of the very few hyperscalers who would lease it, sitting in a special-purpose vehicle, levered by insurance capital, carried at a residual value that has never been tested in a downturn.

Decomposing AI capex spend

• Silicon is different. It is not only one of the fastest-depreciating assets we can name, but the financing market behind it is also developing so quickly that it will soon become its own asset class.

• Said differently, the majority of the dollars that will be used to finance the forthcoming and massive capex build-out will capitalize the asset with the lowest potential recovery or residual value in a downturn, and is one with which financing markets have the shortest track record and least experience.

• What is a GPU worth if you have to sell it? Less than you paid, and less every quarter.

👉 Read Ares: In The Gaps

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💰Fundraising News

Cheyne Capital’s $4bn European Real Estate IX

Cheyne Capital, a London-based credit manager, closed its $4 billion European Real Estate Credit Holdings IX. The fund lends against hotels, offices, student accommodation, residential and mixed-use properties across Belgium, France, Ireland, Italy, Portugal, Spain, Sweden and the UK. More than half of committed capital has already been deployed across 73 underlying loans.

👉 Cheyne Announcement

PCCP $2.3bn Real Estate Credit XI.

PCCP, a Los Angeles-based real estate manager, closed its $2.3 billion Credit XI. The fund focuses on U.S. middle market investments across the four traditional property sectors: residential for rent, industrial, retail, and office.

👉 PCCP News

Goldman Sachs’ $10bn Evergreen European private credit

Goldman Sachs Alternatives, a New York-based asset manager, surpassed $10 billion in total assets for its evergreen European private credit strategy. The strategy finances European mid-market companies under a buy-and-hold approach. The portfolio now has exposure to more than 400 companies, including private credit loans to over 100 firms.

👉 GS Announcement

KKR’s $350m Equipment Finance Platform

KKR launched Akrapoint Commercial Capital, a Denver-based equipment finance platform. KKR committed $350 million through its Asset-Based Finance strategy. The platform will finance vocational assets, specialty trailers, and industrial equipment for small and middle-market businesses across US manufacturing, energy, sanitation, construction and transportation sectors.

👉KKR Announcement

Blackstone Private Markets Fund

Blackstone launched its Private Markets Fund, a new perpetual strategy giving eligible non-US investors access to private equity, infrastructure, real estate and credit through a single allocation.

👉 Blackstone Announcement

Aegon AM’s Insurance Credit Fund

Aegon Asset Management, a Netherlands-based asset manager, launched its Insured Credit Fund. The evergreen strategy is for institutional investors in the UK and Europe. The fund invests in private credit globally, with underlying loans insured by insurers carrying A or AA ratings to transfer credit risk away from the borrower toward the insurer.

👉Aegon Announcement

Enercon Wind Farm Financing

Enercon, a Germany-based wind turbine manufacturer, launched the Enercon Finance Solutions Fund to provide mezzanine financing for new and existing wind farm projects. The fund offers mezzanine loans of up to 10 million euros per project, reducing operators’ equity contributions while letting them retain ownership and control of their projects. The fund is anchored by MEAG, the asset manager of Munich Re Group.

👉 Enercon Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

👋 Hey, Nick here. You’re reading the 1st Edition of Three Questions with The Credit Crunch.

I’m delighted to welcome Marcel Schindler as this week’s guest. Marcel Schindler, Partner and Head of Private Debt at StepStone Group, leads the firm’s global private debt activities.

StepStone Group Inc. (Nasdaq: STEP) is a global private markets investment firm focused on providing customized investment solutions and advisory and data services to its clients. As of June 30, 2026, StepStone was responsible for approximately $913 billion of total capital, including $245 billion of assets under management. StepStone’s clients include some of the world’s largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds, and insurance companies, as well as prominent endowments, foundations, family offices, and private wealth clients, which include high-net-worth and mass affluent individuals. StepStone partners with its clients to develop and build private markets portfolios designed to meet their specific objectives across the private equity, infrastructure, private debt, and real estate asset classes.

Stepstone’s Private Debt program leverages the Firm’s global platform to target privately negotiated debt transactions across corporate, real estate, and infrastructure debt. As of June 30, 2026, Stepstone Private Debt has total capital responsibility for $88 billion.”

1. Where do you see the market making mistakes right now? What opportunities does this open up?

“LPs exiting private credit strategies — such as BDCs — on the assumption of an impending credit downturn may be unintentionally positioning themselves for greater downside if that very scenario unfolds.”

Let me start with a simple premise: the market is generally right. However, while markets ultimately reflect aggregate information, they also tend to express periods of clear over- and underestimation, often driven less by fundamentals and more by investor sentiment.

At the moment, sentiment appears strongly influenced by a combination of risk aversion and return-seeking behaviour. We see this reflected in current allocation behavior. For example, some investors – mainly in the segment of wealth advisors - are rapidly reducing their exposure to credit, largely in response to negative media narratives suggesting a potential breakdown of credit markets. At the same time, proceeds are reallocated into equities.

This raises an important question: in what scenario would equities meaningfully outperform during a genuine credit dislocation? Historically, a credit downturn has typically been accompanied by falling equity valuations. In that context, moving from credit into equities may not reduce risk but increase it. In fact, LPs exiting private credit strategies — such as BDCs — on the assumption of an impending credit downturn may be unintentionally positioning themselves for potentially remaining exposed to downside risk if that scenario unfolds.

What this highlights, particularly in private markets and in comparison to public markets, is the importance of patience and persistence as core investment principles. Short-term sentiment-driven allocation shifts often come at the expense of long-term value creation.

That said, it is fair to acknowledge that credit markets have experienced a period of rapid growth. Such expansion inevitably requires adjustment, both at the GP level and in the quality of underlying investments. Increased competition has, in some cases, resulted in weaker manager selection and less disciplined transaction execution. GPs have often been incentivized to raise and deploy capital quickly, not only in primary strategies but also in secondaries.

This dynamic is particularly visible in the credit secondary market, where capital raised has significantly outpaced transaction volumes. As a result, discounts have compressed and, in my view, we believe credit tail risk may not be fully reflected in current pricing.

Some market participants argue that secondary volumes in credit will evolve in a similar way to private equity secondaries. However, this comparison overlooks a fundamental difference in the nature of the underlying assets. Credit instruments are typically shorter in duration and inherently more exposed to tail risk. As a result, the structural development of credit secondaries is unlikely to mirror that of private equity and underwriting discipline is even more required.

It is true that we have seen an increase in secondary activity, but this growth has been largely one-sided. It has primarily been driven by GP-led transactions, often used as a tool by managers to restructure portfolios and address tail exposures.

Taken together, these dynamics create opportunities for “patient” capital that focuses on providing liquidity to off-market transactions and on strategies that are not simply the flavour of the season.

2. What have you changed your mind on in the last year?

“The resilience of the corporate market has proven significantly stronger than most of us anticipated.”

Over recent years, the market has absorbed a series of major disruptions—COVID-19, rapid interest rate increases, energy price shocks stemming from both the Russia–Ukraine conflict and more recent geopolitical tensions in the Middle East, and now the accelerating impact of AI.

What stands out in particular is the adaptability of sponsor-owned companies. Their ability to adjust business models in response to unforeseen challenges, while maintaining competitiveness against both private and public peers, is remarkable. While this resilience is not yet fully reflected in returns—given that private equity is currently underperforming public equity over a ten-year horizon—it is clearly visible at the level of underlying business fundamentals.

In an environment characterized by increasingly rapid and frequent disruption, this reinforces the view that private market strategies may offer long-tern advantages when supported by disciplined selection and portfolio construction. However, realizing this advantage requires patience, as well as an ever-increasing level of selectivity and skill in manager and asset selection to achieve the desired outperformance.

3. What advice would you give investors navigating difficult portfolio situations? What bad advice do you hear repeated most often?

Diversification benefits are often not fully understood, and structural risks—such as increasing overlap in underlying positions across GPs—are frequently underestimated in today’s market environment.

Two areas that are frequently underestimated in private markets—not just in private credit—are portfolio construction and monitoring & reporting (M&R) capabilities.

Some investors focus heavily on manager selection and invest in building strong underwriting capabilities. While important, this alone is not sufficient to prevent fundamental issues when constructing and overseeing a portfolio.

When challenges arise in an existing portfolio, we believe investors should consider first performing a thorough, expert-level analysis of the underlying drivers, rather than reacting prematurely or “throwing out the baby with the bathwater.” Over the past 30 years, StepStone has led numerous portfolio analyses and restructurings, designed to help investors evaluate potential paths forward. While secondary transactions are one potential solution, there are often less obvious, more effective alternatives that remain underutilized by investors.

One of the most common misconceptions we encounter relates to portfolio construction and how portfolios should be monitored—particularly in credit. Diversification benefits are often not fully understood, and structural risks—such as increasing overlap in underlying positions across GPs—are frequently underestimated in today’s market environment.

Adopting a holistic portfolio construction approach, rather than focusing solely on GP selection, may help improve portfolio stability and support more resilient risk-adjusted outcomes over the medium term. This requires not only a deep and broad understanding of the investment landscape and GP universe, but also the ability to design and implement structurally diversified multi-credit portfolios.

Moreover, the rationale for domain expertise and asset-class specific tooling has grown in lockstep with the expansion of Private Credit as a proportion of institutional portfolios. Logically, as exposure increases, and commensurate regulatory scrutiny ensues, more light-touch or generalist processes become inadequate, and primed for optimization. For example, broad-brush comparisons between the syndicated loan universe and direct lending portfolios are now increasingly limited as a point of comparison given the emergence of specialist tools such as the Kroll StepStone Private Credit Benchmarks – a solution StepStone developed jointly with Kroll, a leading independent provider of private market valuations, in order to bring transparency to the market.

Bespoke and representative benchmarks are but one piece of the portfolio monitoring evolution, however. Absent the correct context, data and relative yardsticks may still evoke more noise than signal. It is here that the most prudent allocators are also soliciting the expertise of asset-class specialists who, by virtue of decades of skin-in-the-game investing experience, can significantly enhance their internal portfolio monitoring process. Whether via time-tested methods that challenge creditworthiness and valuation assumptions, or via proven scenario analysis that helps transform historical data into forward-looking risk intelligence, partnerships that externalize monitoring and reporting are helping unlock the private markets scale that LPs require.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• Lower mid-market stress has climbed more than tenfold since 2023. Loans below 90% of par for borrowers with EBITDA below $20 million have risen from ~1% in 2023 to 12% today. Houlihan Lokey

• Private Credit Defaults Are 1%, 6% or 19%, Depending Who You Ask. Link

US corporate savings are down 86% vs. the last cycle

• Much of that shift is attributable to the (formerly “asset light”) hyperscalers, which transitioned from the economy’s largest providers of liquidity to its largest users of it.

• 👉 Read Carlyle’s Rules of Relevance

Manager & Deal Updates

• KKR’s private investment-grade volume has reached $80bn so far this year, twice what it did in all of 2025. Link

• A deep dive into Blackstone’s hybrid debt deal with Air Canada’s loyalty scheme. Link

BDC Redemptions Q3 26 Update: Week 3

Last week saw two more BDC funds announce Q3 redemptions:

• Redemption requests have fallen for all managers so far.

• Oaktree’s Strategic Credit Fund received redemption requests lower than its cap

• Morgan Stanley capped its redemptions at 5%.

PitchBook published an update on global private market fundraising.

Below are my highlights:

👉 Read PitchBook’s Global Private Market Fundraising Report

Private markets have nearly tripled since 2016

• AUM has risen from $6.1 trillion to $16.7 trillion.

• However, this growth was driven in part by a period of exuberance for risk assets, with private capital fundraising peaking in 2021.

• Since then, fundraising has been in a multiyear decline.

• If the pace holds through year-end, the global fundraising total will decline for a fifth straight year.

YoY changes in trailing 12-month fundraising activity by strategy

Negative net cash flows since 2022 have tested investors’ resolve

• The cause of the fundraising slowdown is multifaceted.

• Mature private markets mean that institutional investors’ allocations are bumping up against risk limits, and disappointing distributions are hindering the flywheel that replenishes new vehicles.

• 2023’s negative balance of $428.6 billion was the largest cash flow gap in records dating back to 1997.

Concentration is a prevailing theme

• Funds larger than $1 billion continue to capture a greater share of total fundraising, reaching 78.2% in H1 2026, up from 59.1% in 2021.

• LPs are gravitating toward GPs with established track records

Aging NAV is a major concern for LPs

• Sluggish distributions have resulted in almost $5 trillion of capital parked in funds that are 7 years or older.

Private debt fundraising has fully entered its era of manager concentration.

• Private credit managers closed on 88 funds totalling $158.3 billion in commitments in H1 2026.

• PitchBook forecasts fewer than 200 closes by year-end, which would mark a fourth consecutive year of decline.

👉 Read PitchBook’s Global Private Market Fundraising Report

💰Fundraising News

Blackstone’s $8bn energy transition and digital infrastructure credit strategy

Blackstone is targeting at least $8 billion for the fourth vintage of its energy transition and digital infrastructure credit strategy. The fund will provide loans to businesses operating across energy security, power and utilities, data centres and semiconductor financing. The previous fund in the series raised $7.1 billion in 2023 and had generated a 15 percent net internal rate of return as of 30 June.

👉 PE Wire

Carlyle $2.3 billion Infrastructure Credit Fund II

Carlyle announced the final close of $2.3 billion for its Infrastructure Credit Fund II. The fund finances below-investment grade infrastructure businesses and assets across energy transition, digital infrastructure, transportation and logistics, low-carbon power, water and waste treatment, and other essential infrastructure sectors. It is more than three times larger than its predecessor.

👉 Carlyle Announcement

Hines and Rialto $1.1bn US commercial office lending

Hines and Rialto Capital, a Houston-based real estate investment manager and a Miami-based credit specialist, announced the final close of Hines Rialto Credit Partners at $1.1 billion. The fund invests in US commercial office properties.

👉 Hines Announcement

Stockdale’s $300 million Real Estate Credit

Stockdale Capital Partners, a Los Angeles-based real estate investment firm, launched a real estate credit platform and aims to write $300 million of loans over the next 12 months. The platform will provide senior bridge loans, mezzanine loans, note purchases and special situations investments across US commercial real estate, initially targeting loans of $15 million to $75 million.

👉 Stockdale Announcement

BlueOrchard $250 million Climate Action Mobilisation

BlueOrchard, a Swiss impact investment manager, announced a first close of $250 million for its Climate Action Mobilisation Fund. The blended finance vehicle provides senior loans to banks, microfinance providers and other financial institutions that channel climate finance to small and medium-sized businesses across emerging and frontier markets.

👉 BlueOrchard Announcement

Neuberger Specialty Finance Aviation Finance

Neuberger Specialty Finance, the New York-based specialty finance arm of Neuberger Berman, launched New Bridge AeroFinance. The aviation financing platform will target a portfolio of more than $2 billion.

👉 Neuberger Specialty Finance Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• HVAC is just one of the specialty trades that keep benefiting from the Data Center Boom. Data center construction spending rose by 46% year-over-year in Q2, as HVAC contractors alone logged more PE deals in the first half of 2026 than in all of 2025 combined. Link

• Lincoln’s Q2 2026 European Private Market Index. Link

• “In the current environment, it’s difficult to find scenarios where real estate equity would outperform current pricing on real estate debt”. Link

Manager & Deal Updates

• 🎧 Crossroads with Oaktree’s Bob O’Leary and Armen Panossian. Link

• The main constraint on our industry is not fundraising. In a market where deal volumes have contracted, and competition is intensifying, the real challenge is finding enough quality investment opportunities. ICG just raised its $14 billion European Corporate IX. Just before the fundraise was announced, CEO Benoît Durteste sat down to discuss the outlook for private credit. Link

Partnership Updates

• Fasanara, a British alt manager, is partnering with stablecoin issuer Tether to launch StableFund, a private credit vehicle that aims to raise as much as $3 billion. Tether has committed $400 million to the fund, which Fasanara Capital will deploy into short-term, asset-backed loans. Tether will also source USDT-linked financing opportunities and provide the infrastructure for moving funds. More here

Secondaries Updates

• PennantPark, a US middle market credit manager, closed its $745 million Credit Secondary Fund. The continuation vehicle was led by Pantheon. More here

• Bridgepoint Credit, a UK-based credit manager, closed a ~$1.4 billion continuation fund led by Pantheon. The fund acquired ~€1.2bn of commitments from Bridgepoint Direct Lending II, a 2017 vintage direct lending fund, and is weighted towards senior secured credits across healthcare, services and technology sectors, with borrowers across the UK, DACH, Nordics, Benelux and French middle market. More here

BDC Redemptions

Q3 26 Update: Week 2

Last week saw two more BDC funds announce Q3 redemptions:

• Redemption requests have fallen for all managers so far.

• BlackRock’s BDEBT received redemption requests lower than its cap

• All other managers capped payouts at 5%.

The 2021–22 Vintage Comes Home to Roost

BlackRock published a private credit update. Below are my highlights:

👉Read BlackRock’s private credit update

The 12 largest BDC portfolios are shrinking

• Investments sold or repaid exceeded fundings for the 3rd quarter in a row

• Not only that, but the trend has worsened

• This is largely driven by weak deal activity, as investments sold or repaid remain broadly consistent with the long-run average.

Total YTD BDC Returns are nearly back at 0%

Smaller borrowers continue to grow more slowly

70% of foreclosure activity is concentrated in loans originated in 2021 and 2022

👉Read BlackRock’s private credit update

💰Fundraising News

ICG’s $14 bn European Corporate IX

ICG announced a final close of ~$14 billion for its Europe Fund IX. The flagship European Corporate strategy will target 15-20 investments in Western Europe across middle and upper-middle market companies, with deal sizes ranging from €250 million to €1 billion. The investments are generally industry-agnostic and will include a blend of debt and equity-like investments.

👉 ICG Announcement

Jefferies’ $4 bn European direct lending strategy

Jefferies Credit Partners has raised $4 billion for its European direct lending strategy. The fund’s perpetual structure provides institutional investors with a portfolio of sponsor-backed, senior secured private credit investments across Europe and the UK. The fund will primarily focus on middle market and upper middle market deals.

👉 Jefferies Announcement

HarbourVest’s $2.4 bn Credit Secondaries Strategy

HarbourVest raised $2.4 billion in initial commitments for its new private credit secondary strategy. The capital sits across several vehicles, including a senior credit secondary fund and an opportunistic credit secondary vehicle, and the firm has not disclosed an overall target, with fundraising expected to run through 2027. Around $500 million has been deployed across five transactions, three GP-led and two LP-led, with several hundred million dollars of further opportunities in the pipeline.

👉 PE Wire

Hercules Capital $2.3 bn Venture & Technology Lending

Hercules Capital, a US Venture Lender, raised $2.3 billion across two institutional private credit vehicles. The vehicles are the Hercules Evergreen Fund, a perpetual open-end fund, and Hercules Growth Lending IV, a closed-end fund, both lending to growth-stage technology and life sciences companies.

👉 Hercules announcement

EIG’s $1.9 bn Infrastructure Debt Fund VI

EIG, a US-based energy and infrastructure specialist, closed its $1.9 billion Senior Infrastructure Debt Fund VI. The fund provides senior secured debt investments across a broad range of sectors, including power generation, renewable energy, energy transition infrastructure and other critical infrastructure, with a primary focus on opportunities in the United States and Europe.

👉 EIG Announcement

Bridgepoint’s Evergreen Fund

Bridgepoint launched a European evergreen direct lending vehicle aimed at institutional investors. The vehicle will be an extension of the firm’s European direct lending strategy; it is not designed as a semi-liquid offering for individual investors. More here

👉 PE Wire

Secondaries Updates

• PennantPark, a US middle market credit manager, closed its $745 million Credit Secondary Fund. The continuation vehicle was led by Pantheon. More here

• Bridgepoint Credit, a UK-based credit manager, closed a ~$1.4 billion continuation fund led by Pantheon. The fund acquired ~€1.2bn of commitments from Bridgepoint Direct Lending II, a 2017 vintage direct lending fund, and is weighted towards senior secured credits across healthcare, services and technology sectors, with borrowers across the UK, DACH, Nordics, Benelux and French middle market. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Manager & Deal Updates

• Claret Capital, a European Technology & Life Science lender, closed its fourth growth debt fund at €575 million, almost doubling the €297 million raised for Fund III in 2022. More here

• ByteDance raised $30 billion from nearly 30 banks to help fund AI projects outside of China. The loan is the second-largest made in Asia this year after SoftBank raised $40 billion in March. Chinese, U.S., ​European and Singaporean banks are participating in the financing, the people said, with the three-year loan co-ordinated ​by Citigroup and JPMorgan. Link

• Blue Owl opened a Zurich office to support its engagement with financial intermediaries in Switzerland, including private banks and wealth managers. It is Blue Owl’s eighth office in the EMEA region and its twenty-fourth globally. Link

Market Updates

• Hamilton Lane: The Rise of Opportunistic Credit. Link

• Dividend recaps are down 40% YoY. Link

Headline vs Reality…

Non-investment-grade credit has a 3% default rate. The private non-investment world is $1.8 trillion

That means $50 billion of defaults. There will be defaults.

Jon Gray, Blackstone

I remember reading this quote earlier in the year, and it reframed how I think about defaults. We should expect defaults; they’re the reason credit carries a spread.

It’s also changed how much weight I give to headlines about defaults. Last week, Bathla, an Australian real estate developer, became the latest private credit default to attract global attention.

Here are three reasons I think the story needs some perspective:

1. Bathla isn’t one of Australia’s largest developers. It didn’t make the Housing Industry Association’s top 20.

2. The headline debt number needs context. Bathla owes A$3.4 billion, less than 1% of Australian banks’ A$500 billion of commercial-property exposure.

3. Australia sounds like a large market, but its CRE market is roughly the size of Florida’s.

Strip away the headlines, and you have a mid-sized developer, a manageable debt pile, and a relatively small market.

Partnership Updates

• MUFG Group and BlackRock entered into discussions to partner in Japan-related private credit opportunities. The discussions will cover areas including the evaluation and sourcing of, and investment in, Japan’s private credit market. Link

• Mubadala Capital received a $500 million commitment from Alpha Dhabi, a UAE-listed investment holding company. Under the revised partnership agreement, Alpha Dhabi will double its capital commitment to $1 billion and increase its ownership interest in its joint venture, MICAD Credit JV, to 40%. Link

BDC Redemptions Update

If you missed the BDC redemption update for Q2 26, below is a summary:

• Investors asked to withdraw ~$24bn across the 15 non-traded BDC funds we track

• Managers met ~$8bn of the requests.

• Median requests were ~10% of NAV.

• All managers capped the redemptions at 5%.

• Read the full update here.

Q3 26 Update: Week 1

Last week saw the first wave of redemption announcements:

• Redemption requests have fallen for all managers so far.

• Cliffwater’s redemption requests w

• Golub received redemption requests lower than its cap

• All other managers capped payouts at 5%.

💰Fundraising News

Claret Capital’s $670 million European Growth Debt Fund

Claret Capital, a London-based manager, announced the final close of its Fund IV, exceeding its €500 million target and almost doubling the €297 million raised for Fund III in 2022. The fund invests in technology and life science businesses across Europe and globally.

👉 Claret Announcement

Arcmont’s $505 million European Direct Lending Fund

Arcmont, a London-based private credit manager, raised A$705 million ($505 million) from four Australian institutional investors for its European direct lending strategy. The strategy lends to European mid-market companies through senior secured, unitranche, and subordinated loans.

👉 Arcmont Announcement

BNP Paribas’ $600 million SRT Mandate

BNP Paribas Asset Management secured a $600 million significant risk transfer mandate from the Arizona State Retirement System, taking the pension fund’s total commitment to BNP’s SRT strategy to $1 billion.

👉BNP Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

1) Do banks have BDCs over a barrel?

The Fed published a great paper on bank funding to BDCs. A few bullets below:

• Funding is concentrated. The top three banks account for almost half of the lending to BDCs, the top five account for about two-thirds, and the top ten account for more than 80 percent.

• BDCs rarely change bank lenders, with data showing less than 1% of BDC borrowings with new bank providers.

• “The structure of lending arrangements means BDCs get rinsed for their borrowing during hiking cycles.”

• 👉 Read the Fed’s notes

2) The core middle market remains the key hub of European direct lending activity

• Deals between €100m-500m accounted for 62% of transactions in H126.

• Larger deals share of the total remained largely stable, with deal count for €1bn+ transactions being 15% on a year-to-date basis, well below the 21% peak in 2024.

👉 CVCs European Credit Perspectives

👉 Debtwire’s European Direct Lender Rankings

3) Securitizations are becoming a common feature of secondaries fundraising.

• Franklin Templeton’s $1.5 billion deal is the latest in a wave of CFOs

• The CFO structure opens the door to investors, such as insurance companies, to invest in highly diversified, long-dated pools of private assets in a way that offers some downside protection.

• 👉 Read Pitchbook

Manager & LP Updates

• Blue Owl led a $2.4 billion compute equipment financing for IREN, a US-listed AI Cloud platform. The facility is structured to fund equipment purchases in tranches over a defined draw period, allowing capital to be deployed alongside the delivery and commissioning of hardware. Link

• BlackRock is exploring potential buyers for TCP Capital’s remaining $671m loan portfolio. Link

• Partners Group raised $1 billion from Indonesian sovereign wealth fund Danantara. Link

Partnership Updates

• Legal & General and WTW, a global insurance broker, partnered to launch a UK private credit LTAF. The launch follows similar moves by Apollo and Hamilton Lane, which all launched LTAFs this year. Link

Learn more about LTAFs

Private Credit’s Sports Opportunity

Apollo published a great paper on the business of sports. Most of the analysis focuses on private equity; However, it also highlights the opportunity for hybrid and private credit solutions to unlock liquidity, optimise balance sheets, and capture equity-like upside with credit-like risk. Below are my highlights:

👉 Read the full report here

Sports Franchises Continue to Trade at Premium Valuations

• Just as athletes and teams have reset what is possible on the field, the business of sports is breaking records of its own.

• Franchise valuations, media rights, sponsorship deals, and global fan engagement are reaching levels once thought out of reach.

• The valuations of NBA teams have grown over 10x in the past 20 years; the global sports media rights market surpassed $60 billion in 2024

US Team Valuations have Outperformed over 60 years

• In an era defined by technological disruption and geopolitical volatility, few asset classes demonstrate genuine resilience.

• Professional sports stand apart for their structural insulation and cultural permanence. More than 73% of adults in the US watch sports, and over half follow American football—the country’s most popular sport.

• Because of the deeply embedded social and cultural relevance, sports franchises represent a long-horizon asset class. Team valuations have compounded at roughly 13% per year over the past six decades.

• Even amid rapid technological change, demand for live sports content has remained stable and adaptive—a pattern Apollo believe unlikely to reverse over the next 20 to 30 years.

Average Sports Teams are Meaningfully Underleveraged

• Traditional lenders have long treated the sector as niche, leaving inefficiencies and gaps in the capital stack

• Despite record valuations, most franchises remain under-levered at roughly 10% loan-to-value, creating vast potential for hybrid and private credit solutions to unlock liquidity, optimize balance sheets, and capture equity-like upside with credit-like risk.

Apollo estimates sports represents a $2.5 trillion+ addressable market, with a growing portion increasingly suited to private credit and structured capital.

Opportunities include:

• Senior secured team and league lending,

• Stadium and media-rights financing,

• Transfer-fee factoring

• NAV lending

• Preferred equity

👉 Read the full report here

💰Fundraising News

Nuveen’s $1bn Sustainable CRE Fund

Nuveen Green Capital, Nuveen’s sustainable finance, announced a first close of $1 billion for its C-PACE Lending Fund IV. C-PACE is a public-private financing program administered at the state level that provides building owners and developers with low-cost capital to make commercial buildings more energy efficient, water efficient, and climate resilient.

👉 Nuveen Announcement

BridgeInvest’s $612m Specialty Credit V

BridgeInvest, a US real estate credit manager, raised $612 million for the second close of its Specialty Credit Fund V. The open-ended investment vehicle lends senior-secured, middle-market commercial real estate loans across the US. It invests across real estate asset types (e.g., multifamily, industrial, retail, hotel and office) and business plans (e.g., pre-development, development, and cash-flowing). It targets loans with a deal size between $20 million and $150 million.

👉 BridgeInvest

Granite Asia $500m APAC fund

Granite Asia, a Singapore-based investment manager, announced its raised more than $500 million for its inaugural private credit vehicle, Libra Hybrid Capital Fund. The fund lends senior secured loans to businesses across Asia-Pacific.

👉 Granite Asia

Bridge $500 million Asset-Backed

Bridge, a New York-based purchase order finance platform, launched a $500 million direct lending programme for suppliers to the largest US retailers. Bridge originates and services the loans, funding up to 100 percent of a brand’s production costs against expected or confirmed orders from retailers including Walmart, Sam’s Club and Best Buy. Consumer packaged goods borrowers typically receive credit lines of $500,000 to $2.5 million, with individual draws running three to five months.

👉 Bridge Announcement

Edge Growth’s $22m First Close

Edge Growth, a South African SME investment manager, announced a first close of $22 million for its Impact Fund. The venture debt fund will invest in growth-stage businesses, typically at Series A to C funding rounds, that have proven their business models. Investment sizes will range between $1m and $4m per company.

👉 Edge Growth Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

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📕 Reads of the Week

Funds raised during higher-volatility periods deliver stronger long-term performance.

Private Credit funds raised in volatile periods outperformed by 3.3 percentage points of Net IRR and 0.2x of TVPI.

👉 Ares: Does Volatility Create Better Vintages?

Market Updates

• Carlyle: Global Private Markets Quarterly. Link

• Lincoln US Private Markets Index:

  • 70.7% of private companies reported YoY revenue growth

  • 64.0% reported YoY EBITDA growth

  • Revenue growth increased to 6.9% vs 6.5% in Q1 26

  • EBITDA growth increased to 5.6% vs 4.7% in Q1 26

  • Read the report here

• Private credit managers eye UK DB pension funds. Link

BDC bond performance has diverged from equity

Where might this divergence lead?

The recent experience of private real estate offers a useful precedent.

During the 2022 dislocation, private real estate vehicles initially resisted the decline seen in publicly traded REITs, only for valuations to converge later through a combination of public market recovery and private market markdowns.

👉 Pimco: What BDC Markets Are Signaling About Private Credit Valuations

Manager & LP Updates

• Blackstone led a CDN$2.5 billion “structured equity” investment in Air Canada’s loyalty business.

  • Investors will receive a minimum IRR of 6.5% if Aeroplan chooses to repurchase the equity stake in Year 5 or Year 8….

    • 👉 Blackstone’s Announcement

• Jefferies Credit Partners is raising a ~$1.2 billion private credit secondaries fund. Link

• Goldman Sachs Launched a Private Credit CIT for DC Plans. Link

Partnership Updates

• Standard Life announced a £2 billion partnership, with CVC, Prudential Financial, Goldman Sachs and MS&AD. The Partnership combines Standard Life’s leading PRT capabilities with CVC’s, PFI’s and Goldman Sachs’ global private markets asset origination. Link

• PGIM committed to a $3 billion multi-year forward-flow facility with GreenSky. Link

European Direct lending deal activity is still behind 2025

👉European Private Credit Monitor

Configure Partners’ Private Credit Quarterly

Configure Partners published its Q2 Quarterly Credit Report. Below are my highlights

👉 Read Configure Partners’ Report

US Direct Lending Slowed Materially in Q2

• U.S. private equity deal value declined 38% quarter-over-quarter.

• Quarterly issuance declined to $34B, less than half the $75B recorded in Q1 2026.

Dry Powder is at record levels ($bn)

What does this mean for private credit?

• Most investors believe demand for loans is well in excess of supply.

• Most deals have one or no covenants.

• Quality deal flow is expected to be the biggest headwind in the next 6 months

👉 Read Configure Partners’ Report

💰Fundraising News

Jefferies’ ~$1.2bn Secondaries Fund

Jefferies Credit Partners is raising ~$1.2 billion for a private credit secondaries vehicle. Structured as a continuation vehicle, the fund will acquire loans previously originated by Jefferies while also committing capital to new lending.

👉 PE Wire

Partners Group $1bn Asia-Pacific Evergreen

Partners Group, a Baar-Zug-based manager, secured a $1 billion private credit mandate from an institutional investor in Asia. The open-ended evergreen mandate targets direct lending opportunities in Asia-Pacific.

👉 Partners Group Announcement

Crestline’s $625 million European Capital Solutions Fund II

Crestline, a Texas-based alt manager, closed its $625 million European Capital Solutions Fund II. The opportunities fund invests across the capital stack, lending to asset-backed and lower-middle-market businesses across North and Western Europe. The strategy targets situations underpinned by tangible collateral, including hard assets such as real estate and infrastructure, as well as music royalties and litigation finance.

👉 Crestline’s Announcement

Northleaf’s $450 million Asset-Based Specialty Finance fund.

Northleaf Capital Partners, a Toronto-based manager, closed its inaugural $450 million Asset-Based Specialty Finance fund. The fund invests in specialist asset-based verticals including entertainment royalties, legal assets, healthcare receivables, and factoring.

👉 Northleaf Announcement

Ninety One’s $404m African Opportunities Fund 3

Ninety One, a London and Cape Town-based manager, closed its $404 million Africa Credit Opportunities Fund 3. The fund lends senior secured loans to businesses and critical infrastructure projects across Africa and other emerging markets. The strategy has now deployed over $1.4 billion across ~100 counterparties in over 30 countries.

👉 Ninety One

Homestead’s $350 million Agriculture Credit

Homestead Capital, a San Francisco-based investment manager specialising in US agriculture, announced the first close of its inaugural commingled private credit strategy. The fund originates senior secured loans to agricultural borrowers across the United States, collateralised primarily by farmland and other agricultural assets, addressing financing needs underserved by traditional agricultural lenders. The first close was anchored by a $150 million commitment from the private credit team of a large US state pension system, which views the strategy as an asset-backed lending diversifier within its private credit portfolio. Homestead is targeting $350 million in total commitments with a hard cap of $500 million, and has deployed more than $1.8 billion across US farmland and agricultural assets since its founding in 2012.

👉 Homestead Announcement

Polar Asset Management $215m SRT fund

Polar Asset Management, a Toronto-based alternative investment manager, raised more than $215 million in the first close of its second dedicated significant risk transfer fund. The strategy invests in SRT transactions, through which banks transfer credit risk on loan portfolios to private investors in order to manage regulatory capital. It follows the firm’s first dedicated SRT vehicle and expands one of the faster-growing niches available to private credit investors.

👉 Polar SRT

ACP Credit $123 million First Close

ACP Credit, a Poland-based manager, held a $123 million first close for its Fund II. The fund lends €5m–€25m to growing SMEs and mid-sized companies across Central European EU countries.

👉 ACP Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

👋 Hey, Nick here. A big welcome to the new subscribers from GIC, Park Square, and 9fin. You’re now one of the 3,282 subscribers, and you’re reading the 180th edition of my private credit newsletter.

Reading on Outlook? The links won’t work. Read it online

Every quarter, I summarise the 400+ pages of earnings transcripts from the largest managers. I do this for two main reasons:

1. It helps me understand the consensus views.

2. It brings out honest and sometimes provocative opinions.

Start with the Provocative Opinions if you’re short on time.

📚 Quotes of the Quarter

Provocative Opinions

• We Find Ourselves on the Happy Part of the ‘K’

• 95% of the Firms in Our Industry Want the World to Stop Changing Until the Principals Retire

• External Perception Is So Disconnected From Operating Fundamentals

• The S&P 500 Has a Concentration Problem

• 90% of the Narrative, 11% of Our Fee-Paying Assets

• It Feels Like There’s Indigestion

• The Marketplace Is Making a Mistake

• The Brain Damage Associated With People Businesses

• We’re a Winner, But Not Everybody Has Had That Same Experience

• A Lot of People Were Calling for This Massive Calamity

• Our Stock Is on Sale Today

• Wealth Flows Could Be More Pro-Cyclical Than People Thought

• It’s Not Our Strategy to Aggressively Take Control of Companies

• Refinancing Those Investments Will Be an Important Test for the Market

The Question Nobody Asked

Are the BDC Redemptions Over?

Consensus Views

1. Fundraising & Capital Formation

2. Deployment & Origination

3. Returns & Performance

4. Portfolio Quality, Defaults & Non-Accruals

5. Spreads, Pricing & Market Conditions

6. Investment Grade Private Credit & Insurance Demand

7. Asset-Based Finance & Specialty Lending

8. Real Estate, Infrastructure & Data Centers

9. Manager Strategy & Platform Growth

10. Wealth, Retail & 401(k)s

11. M&A, Consolidation & Secondaries

Transcripts can be found here

Provocative Opinions

We Find Ourselves on the Happy Part of the ‘K’

KKR — Scott Nuttall

Our industry is increasingly K-shaped, and most of the external focus is going to be on the unhappy part of the ‘K’. We find ourselves on the happy part of the ‘K’, and that’s what’s showing up in the numbers.

↩ Return to index

95% of the Firms in Our Industry Want the World to Stop Changing Until the Principals Retire

Apollo — Marc Rowan

The future that we see is incredibly bright. The steps our industry needs to take will cause profound change in the way we do business...

Firms that address this in the right way and the right time are going to separate themselves from the 95% of the firms in our industry who simply want the world to stop changing until the principals can retire.

↩ Return to index

External Perception Is So Disconnected From Operating Fundamentals

KKR — Scott Nuttall

We’ve been public 17 years. Joe and I have been here 30. As you and I have talked about, our space is subject to periodic bouts of external pessimism and periodic bouts of optimism. In our time here, I don’t recall a period of time where the external perception is so disconnected from the operating fundamentals and how it feels inside the firm. And in our experience, the best response to pessimism is performance, and so we’re largely inclined to let the numbers do the talking.

KKR — Robert Lewin

On the industry-wide criticism that capital is not being returned to LPs.

A common narrative that investors hear is that our industry isn’t returning capital to investors. This is just not accurate from a KKR perspective. We’ve actually had an acceleration in exit activity. The second quarter was the largest monetization quarter in our history.

↩ Return to index

The S&P 500 Has a Concentration Problem

Apollo — Marc Rowan

Recall that some 10 stocks are nearly 50% of the S&P. And when things go poorly, they go poorly all around. Private markets now offer the kind of diversification that investors used to expect in public markets when there were 8,000 public companies versus the 3,800 public companies we have today.

↩ Return to index

90% of the Narrative, 11% of Our Fee-Paying Assets

Blue Owl — Marc Lipschultz

We like the direct lending business. But remember, it’s now 35% of our assets. And the products that have probably been 90% of the narrative, are actually 11% of our fee-paying assets, which is the wealth products in direct lending.

↩ Return to index

It Feels Like There’s Indigestion

KKR — Craig Larson

Answering a question on whether the AI CapEx cycle is overbuilt.

hyperscaler data center spreads have widened pretty meaningfully just over the last couple of weeks. That stands in contrast to the broader IG markets, which, again, still pretty much remain at their tight. And we’ve had year-to-date this flurry of jumbo deals. I saw a note a day or two ago. I think we’ve had more $25-plus billion deals year-to-date than the last five or six years combined. And so, it does. It feels like there’s indigestion.

↩ Return to index

The Marketplace Is Making a Mistake

Apollo — Jim Zelter

The marketplace in aggregate is making a mistake by just thinking the global industrial renaissance is AI and data centers.

In 12 to 24 months from now, we will be talking about the onshoring / re-onshoring of industrial bases of the US, defense, more energy transition.

↩ Return to index

The Brain Damage Associated With People Businesses

Apollo — Marc Rowan

We have not been big proponents of asset manager M&A.

Every one of these asset manager purchases, you probably have to pay twice, both to the equity owners and then to the employees.

We’re growing so fast from originating good transactions that we debate in a negative way the utility of just more of the same as opposed to using excess capital in our business to diversify the business in adjacencies that will provide recurring fee revenue.

↩ Return to index

We’re a Winner, But Not Everybody Has Had That Same Experience

Apollo — Jim Zelter

On equity fundraising headwinds.

It is a tough fundraising environment. We’re fortunate that if you look at our institutional business, we’re basically — have almost double last year’s production through six months... That’s not every GP...

We’re a winner, but we recognize that not everybody has had that same experience.

↩ Return to index

A Lot of People Were Calling for This Massive Calamity

Blackstone — Jon Gray

Answering on what drove the reduction in BCRED withdrawals.

I would say as much as anything, it’s the level of noise has come down. I think a lot of people were calling for this massive calamity. And when the calamity did not occur, I think sort of the press, what you see on TV or Twitter or in newspapers, that has calmed, which before obviously was getting clients understandably nervous.

↩ Return to index

Our Stock Is on Sale Today

Blackstone — Steve Schwarzman

Our stock is on sale today and we believe it represents one of the most inexpensive ways to participate in this extraordinary megatrend.

↩ Return to index

Wealth Flows Could Be More Pro-Cyclical Than People Thought

Ares — Michael Arougheti

The individual investor can sometimes look to divest when they should be investing and running a diversified book in institutional and wealth markets is prudent. I still think it’s early days to know exactly how these will play over time, but there is a risk that some of the wealth flows could be more pro-cyclical than people thought they were, which is why we continue to index aggressively into the institutional market.

↩ Return to index

It’s Not Our Strategy to Aggressively Take Control of Companies

Ares Capital — Kort Schnabel, CEO

As much as we enjoy the higher returns that can often come from those types of situations, it’s not our strategy to go in and aggressively take control of companies from owners of businesses when there’s weakness. We would much rather the owner of the business put in capital and support that company.

↩ Return to index

Refinancing Those Investments Will Be an Important Test for the Market

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

Many loans originated in 2020 and 2021 were underwritten when base rates were near zero, valuation multiples were at peak levels, and the implications of AI were not yet apparent. A meaningful portion of that cohort, especially ARR-based loans, will mature in 2027 and 2028. Refinancing those investments will be an important test for the market.

↩ Return to index

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What Nobody Asked

Ares Capital — Kort Schnabel, CEO

Okay, great. We got through a quarter without any software questions.

↩ Return to index

Are the BDC Redemptions Over?

Blackstone — Jon Gray

[BCRED’s] repurchase requests remained elevated and exceeded the 5% limit, with approximately 50% fulfilled, resulting in net outflows of $1.2 billion... We’ve been here before with BREIT. And while it’s early in the third quarter, redemption requests are down materially.

Apollo — Jim Zelter

When we look at what we were last quarter versus this quarter, acknowledging that it is a bit early in the Q. We’re seeing half the redemption we saw last time. So, I think you’re going to see a dissipation.

Ares — Michael Arougheti

If you were to look at the top 10 redeemers in our non-traded BDC, they were about half of redemption requests. And 2/3 of our Q2 redemption requests were from the Q1 Q. So while the individual investor is slowing its request for redemptions, we’re satisfying the disproportionate demand coming out of Asia. And that number has been cut in half over the last 2 quarters from about $1.2 billion to a little over $600 million... that would probably mean that you get back to stasis in the next 2 to 3 quarters is my guess.

Ares — Michael Arougheti

Redemption requests primarily coming from a small number of non-U.S. family offices and smaller institutions. These types of investors represent only approximately 10% of the vehicles NAV and we intend to make certain adjustments to new share classes that we would offer to them going forward.

Ares — Michael Arougheti

I would expect that when we get to the end of the year, our nontraded BDC will actually be larger at year-end ’26 than it was at year-end ’25.

Blue Owl — Alan Kirshenbaum

In wealth, we believe we have seen a bottoming of evergreen inflows in the May 1 close... And for the July 1 close, we saw a greater than 50% increase in evergreen inflows versus that May 1 close. While we are still below historical levels, we are encouraged by this data.

Blue Owl — Alan Kirshenbaum

For the second quarter in a row, we continued to see 90% of our OCIC fund investors not request a single dollar of redemptions. The small shareholder base that did put in redemption requests remained largely unchanged from last quarter with very limited new participation.

↩ Return to index

Consensus Views

1. Fundraising & Capital Formation

Ares — Michael Arougheti

For the second quarter, we raised approximately $36 billion of gross capital the highest quarter of fundraising in our history.

KKR — Robert Lewin

At our April 2024 Investor Day, we set out a three-year $300 billion fundraising target. Since the beginning of 2024 through June 30th of this year, we have raised $305 billion of capital with $34 billion coming in in Q2. So beating our three-year target in just 2.5 years.

Carlyle — Harvey Schwartz

Our fundraising momentum is exceptional, with $56 billion of inflows over the last 12 months, a 10% increase from the prior year. All this drove AUM to a record $485 billion. As we enter our fundraising super cycle, we’ve already attracted $30 billion of organic inflows in the first half of 2026, another firm record.

Brookfield — Nick Goodman

Fundraising was a record $77 billion during the quarter, reflecting continued strong demand across our flagship and complementary strategies as well as growth.

Blue Owl — Alan Kirshenbaum

We raised $7.8 billion of total capital during the quarter, bringing our last 12-month total capital raising to $50.5 billion, the equivalent of 18% of our total AUM at this time last year. All of this capital raising was organic and nearly 40% of it was raised during the first half of 2026.

↩ Return to index

2. Deployment & Origination

Apollo — Marc Rowan

Origination here was a very strong quarter, $74 billion. Just to give you some perspective, that does not include Broadcom, the largest origination in our sector ever, or a number of others... And so, $50 billion of signed and announced in Q2 will benefit coming quarters. The pipeline has never been stronger

Ares — Michael Arougheti

Our overall investment activity increased meaningfully in Q2 to approximately $36 billion compared to approximately $27 billion in the prior year period. Our firm-wide forward investment pipeline also improved nearly 20% quarter-over-quarter to a new record.

Blue Owl — Alan Kirshenbaum

Our platform expansion has benefited deployment, with Alt Credit deploying nearly $7 billion over the last 12 months, more than double the prior 12-month period, and we’ve seen meaningful deployment expansion for investment-grade credit as well.

↩ Return to index

3. Returns & Performance

KKR — Craig Larson

We had the highest monetization quarter in our history with Realized Performance Income of $848 million and Realized Investment Income of $220 million, which includes $30 million of investment gains generated from our Strategic Holdings segment.

Ares — Jarrod Phillips

Over the last 12 months, we generated gross returns of 16.4% in alternative credit, 8.9% in opportunistic credit, 11.2% in U.S. senior Direct Lending, 8.9% in U.S. junior Direct Lending, 8.3% in European Direct Lending and 19% in APAC credit.

Blue Owl — Alan Kirshenbaum

Last 12-month total returns were 8.3% for Direct Lending and 11.4% for Alternative Credit, comparing favorably to relevant public credit benchmarks over the same period.

↩ Return to index

4. Portfolio Quality, Defaults & Non-Accruals

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

Software is not a monolithic category, and AI exposure is not evenly distributed. The greatest risk is likely concentrated where business model disruption intersects with high leverage, limited free cash flow, and a near or medium-term refinancing need.

Ares — Jarrod Phillips

In U.S. Direct Lending, nonaccrual levels were flat quarter-over-quarter and remain low at less than 2%. We’re not seeing any signs of a turn in the credit cycle as evidenced by 9% year-over-year organic EBITDA growth from our portfolio companies.

Ares Capital — Jim Miller, President

Our non-accruals at cost ended the quarter at 2.4%, still well below our approximate 3% historical average since the global financial crisis, and the BDC historical average of approximately 4% over the same time frame. Our non-accrual rate at fair value of 1.4% also remained well below our historical levels.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

While industry data for non-accruals has been mixed in recent quarters, OCSL’s non-accruals are down approximately 280 basis points from its peak in March of 2025.

↩ Return to index

5. Spreads, Pricing & Market Conditions

KKR — Craig Larson

hyperscaler data center spreads have widened pretty meaningfully just over the last couple of weeks. That stands in contrast to the broader IG markets, which, again, still pretty much remain at their tight.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

During the June quarter, new sponsor-backed first-lien direct loans were pricing in the range of SOFR+ 500-550 basis points, consistent with the March quarter and above the 2025 types of SOFR+ 450-475.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

In this environment, the balance between private credit borrowers and lenders has improved. Competition has generally been more rational, and underwriting standards have strengthened. On average, loans issued in calendar 2026 offer more attractive terms than transactions completed in 2024 and 2025.

↩ Return to index

6. Investment Grade Private Credit & Insurance Demand

Apollo — Marc Rowan

And we have built a dominant IG origination franchise supporting the global industrial renaissance. Our peers are just now discovering that IG is actually a source of growth. We’ve seen this coming, and we’re happy to have led them here.

Blackstone — Jon Gray

In total, we now have 40 clients in our dedicated insurance solutions area, a number which has nearly doubled in the past two years... We’re building something highly differentiated in this channel and have established a massive scale advantage with the combined strength of 40 of the leading insurers in the world — all without taking on insurance liabilities.

Blackstone — Jon Gray

We announced a new partnership with Japan’s largest life insurer, Nippon Life, in which we’ll deploy approximately $10 billion in private credit over the next several years, and also invest in their domestic real estate portfolio.

↩ Return to index

7. Asset-Based Finance & Specialty Lending

Ares — Michael Arougheti

We now manage 4 of the 5 largest institutional ABF funds in the market. We believe that the addressable market is measuring trillions of dollars

Ares — Michael Arougheti

One of the things that differentiates us is our lack of focus and exposure on the consumer part of the market, which I think a lot of our peers spend time because that is your point, a place where you can originate through agreements as opposed to kind of owned origination.

Blue Owl — Marc Lipschultz

Alternative Credit, which is approaching 10% of our Credit AUM, has experienced 35% AUM growth over the past year. During the second quarter, we reached the 1-year anniversary of the inception of our alternative credit interval fund, which has surpassed $2.7 billion in size and has outperformed the leveraged loan index by more than 600 basis points over that period.

↩ Return to index

8. Real Estate, Infrastructure & Data Centers

Blackstone — Steve Schwarzman

We are seeing extraordinary momentum in our data center platform, which has grown to $185 billion of total value, up from $130 billion at the start of just this year. We expect to lease over three times more capacity this year than any other year in our history. If we execute on our pipeline, our data center platform could double over the next few years.

KKR — Scott Nuttall

we’re focused, as a reminder, not so much on investing in what’s going to be the next chip company or the next LLM. It’s more about the opportunities around this development, in particular, from an Infrastructure and Real Estate and Credit standpoint. So, it’s kind of around the space.

Blackstone — Steve Schwarzman

First, we teamed with Google to build a new AI cloud provider powered by their TPU chips, investing up to $5 billion initially. We think this business has the potential to scale quite significantly over time, as the first neocloud for TPUs. Second, we partnered with Anthropic to form a company focused on driving enterprise adoption of their AI-powered solutions.

Brookfield — Bruce Flatt

Our recent $100 billion announcement to build one of the world’s most advanced AI factories in Kentucky, in partnership with the U.S. government, illustrates this well. We were selected by the U.S. Department of Energy to repurpose a federally-owned industrial site and deliver a major world-class AI campus... This is federal land that has DOE uses on it, and as a result, today needs few approvals to move forward.

Ares — Michael Arougheti

Our Ada team, which has long-standing hyperscaler relationships, is currently executing on 7 large data center campuses representing 22 individual data center investments with approximately 1 gigawatt of compute and has a strong pipeline of future projects.

Blackstone — Jon Gray

We definitely see today a global shortage of compute. There’s obviously a lot of dollars being invested, but the dollars are not keeping up with the demand... And I do think ultimately that what that means is those things that are built and operating are worth more.

Brookfield — Nick Goodman

Answering a question on the NVIDIA compute financing platform mobilising around $500 billion.

This is an MoU at this stage that we have signed with NVIDIA pooling together large pools of capital... compute is the critical part of the infra stack supporting AI. Up until now, our business historically largely focused on new build development. Now we’re focused on developing partnerships to finance the chips and accelerate growth with bespoke deals. When you’re building an AI factory, as you know, the GPUs can represent half of the required capital to complete the build. So finding efficient ways to finance the equipment is becoming increasingly important. We’ve been working with NVIDIA closely for the last 18 to 24 months.

BlackRock — Laurence Fink, Chairman and CEO

As you think about these hyperscalers, they went from balance sheet-light companies to major balance sheet needs in building out data centers, building out the infrastructure. They’re looking for strategic partners that can provide them the totality of that relationship. There’s only a few firms that can be doing that.

↩ Return to index

9. Manager Strategy & Platform Growth

Apollo — Marc Rowan

Just for some perspective, Apollo and its peer group, in 2008, roughly $40 billion of AUM. Almost all of us were a $35 billion of private equity and $5 billion of something else. Today, Apollo is closer to $1.050 trillion.

KKR — Robert Lewin

KKR employees also own approximately 30% of our shares. For context, the other companies in the S&P 500 have an average of approximately 2% insider ownership, so it’s that ownership mentality that fundamentally shapes how we think about capital allocation and long-term value creation.

Carlyle — Justin Plouffe

We saw a very attractive opportunity to repurchase CG shares during the quarter. We were active buyers deploying a record $304 million to repurchase or withhold 6.7 million shares. We reduced our adjusted share count by more than 1% this year, with $1.6 billion still remaining on our $2 billion repurchase authorization.

Brookfield — Nick Goodman

we have repurchased approximately $580 million of BN shares in the open market year to date at an average price of $42 per share, keeping us on pace with the repurchases of the last two years...

Blue Owl — Alan Kirshenbaum

We are certainly seeing an inflection point in our business today... We touched on already today quarter-over-quarter sequential growth in our management fees in 3Q and in 4Q. We see the growth rate for management fees higher in 2027 than in 2026... So look, generally, we’re pretty sober about where we are today in the last 6 or 8 months. We are optimistic about growth increasing as we go from here.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

In an environment where traditional sponsor-backed middle market activity remains subdued, the ability to source beyond U.S. sponsor-backed direct lending becomes increasingly valuable.

Blue Owl — Marc Lipschultz

Today, Direct Lending is approximately 35% of our AUM compared to nearly half of our AUM just 2 years ago.

↩ Return to index

10. Wealth, Retail & 401(k)s

Apollo — Marc Rowan

The world is short, guaranteed lifetime income. The populations are aging. Almost no one else offers guarantees. The global investor renaissance is giving us long-dated fixed income to support these guarantees. We should be giants straddling the financial world.

Apollo — Jim Zelter

The last 11 quarters in the non-traded BDC space, the dispersion of managers was about 1% from top to bottom. The last two quarters, 4% and 2.5%, and we were in the top quartile.

KKR — Scott Nuttall

K-Series is built to be able to go to the accredited investor in the U.S., which is $1 million and up in net worth. That is a single-digit percentage of U.S. households. The other 90-plus percent of K-Series is not relevant to today. And so that’s where our partnership with Capital Group comes in because we want to further extend our reach and our distribution relationships, and they have relationships with 220,000 of the 300,000 advisers in the United States. If we spend another 50 years at KKR, I’m not sure we could build that kind of relationship and trust with that kind of penetration.

Carlyle — Harvey Schwartz

We generated over $7 billion in gross sales across evergreen wealth over the past year, driving AUM in these strategies to a record $20 billion. That’s up more than 60% year-over-year.

↩ Return to index

11. M&A, Consolidation & Secondaries

Apollo — Marc Rowan

As you know, from prior quarters, we have not been big proponents of asset manager M&A... We’re growing so fast from originating good transactions that we debate in a negative way the utility of just more of the same as opposed to using excess capital in our business to diversify the business in adjacencies that will provide recurring fee revenue.

Carlyle — Harvey Schwartz

there’s a secular shift here, which we’ve talked about before, which is really about how these businesses are truly now corporate finance solutions providers. If you went back several years, it was really about the secondaries business, which was really more a point-to-point business in some respects. Now our dialogue around the world with GPs and LPs is really about portfolio repositioning, how to think about the optimized portfolio, how do GPs create value for themselves and grow their businesses.

BlackRock — Laurence Fink, Chairman and CEO

These are just latest examples of BlackRock’s successful M&A approach. We acquire capabilities our clients are in need of, we integrate them onto and into our global platform, and we scale them faster than they could have scaled on their own.

↩↩ Return to index

Thanks again for reading. Let me know if you find these posts useful or how I can improve it for next quarter.

Share this with your Investor Relations Colleagues.

This newsletter is for education or entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• Ares: Private credit’s returns have outperformed leveraged loans in 16 of the past 20 years. Link

• The Federal Reserve Bank of New York launched a U.S. direct lending survey. Participation will be voluntary, and participant criteria is available here.

Manager & LP Updates

• BlackRock sold half of its BDC’s debt portfolio to a continuation vehicle backed by Pantheon. Link

Read Accredited Investor Insights post for the full breakdown.

• HPS led a £550m financing to Aston Martin secured against its branding and naming rights. Bondholders threatened legal action, believing Aston Martin had moved assets out of their pool of collateral. Link

• Jane Street is looking to refinance $11 billion of existing public-market debt into a large private credit facility. The transaction would replace its current mix of bonds and syndicated loans with private credit provided by a small group of lenders, reportedly including Pimco. The move would give Jane Street more flexibility over its capital structure, potentially provide additional funding for trading and AI, and reduce the amount of financial information it has to disclose to a broad group of public bond investors. Link

• Brookfield: How specialization can provide an investment edge in private credit. Link

Apollo: The AI Buildout Is Reshaping Credit Markets

Apollo published its take on how private credit can support the AI buildout alongside public markets. See my key takeaways below

👉 Read the full report here

Hyperscaler Annual Capex Could Exceed $1 trillion in 2027

• Unlike previous technology cycles, which were largely asset-light and financed through venture capital, public equity, and internal free cash flow, AI requires sustained investment in chips, servers, data centers, and power.

• Hyperscalers will account for a large share of this spending, but they will not finance the buildout alone.

AI-related debt accounts for nearly 40% of longer-duration bond supply

• Strong operating cash flow will fund a meaningful portion of this investment, but not all of it. No single financing market will be large enough to meet these needs. Apollo expects Public IG to finance only a fraction of the capital required.

• Amazon, Alphabet, SpaceX, Meta, Oracle, and Nvidia have issued about $220 billion of debt this year alone.

Hyperscaler spreads have more than doubled since the middle of 2025

• New issues have required greater price concessions, and several long-dated transactions have widened meaningfully since issuance.

• Apollo views this as a supply-driven repricing rather than a sign of weaker credit fundamentals.

• Public markets are being asked to absorb an unusually large volume of long-dated issuance from a relatively small group of borrowers.

Public IG Capacity Is Constrained by Concentration and Ratings

• Hyperscalers are already becoming significant components of IG benchmarks. Additional borrowing would increase both single-name and sector concentration.

• Ratings may provide another constraint. Although some issuers could borrow substantially more while remaining below 2x leverage, doing so could result in multiple-notch downgrades, increasing financing costs, and reducing demand from ratings-sensitive investors.

• The gap between fundamental borrowing capacity and public-market capacity creates a substantial role for private credit.

The existing AI ecosystem could support more than $2 trillion of additional IG debt

• Public IG markets may be able to absorb less than $1 trillion through 2030

• The gap between borrower capacity and public-market capacity creates a substantial role for private credit

• Private IG will likely provide more than $1 trillion of this financing

👉 Learn more in Apollo’s Mid-Year Outlook Report

Pitchbook US Private Credit Monitor

YTD volume and deal count are tracking behind last year’s pace

Spreads are up 5% YoY. The 450–499 bps range dominates the new-issue LBO spread distribution

The BSL - direct lending spread gap widened to 166 bps, up 7 bps from Q2

👉Read Pitchbook US, Private Credit Monitor

💰Fundraising News

Bridgepoint’s $5.9bn Direct Lending IV

Bridgepoint, a London-based asset manager, raised $5.9 billion for the final close of Bridgepoint Direct Lending IV. The fund senior loans to mid-market companies across Europe. It is already more than 40 percent invested across over 20 borrowers.

👉 Private Equity Wire Announcement

Comvest’s $5.4bn Fund VII

Comvest Credit Partners, a West Palm Beach-based direct lender, announced a final close of $5.4 billion for its Credit Partners VII. The fund invests across both cash flow and asset-based lending opportunities for sponsored and non-sponsored middle-market companies, allocating between the two as relative value shifts. It is the largest raise in the platform’s history and the first since the manager was acquired by Manulife.

👉 Comvest Announcement

Willow Tree Credit Partners’ $730m Continuation Fund

Willow Tree Credit Partners, a New York-based direct lender, closed a $730 million private credit continuation vehicle led by HarbourVest Partners. The vehicle holds a portfolio of approximately 130 positions, primarily first lien loans to sponsor-backed companies, moved out of Willow Tree Fund II, a late 2020 and early 2021 vintage. Existing limited partners were given the option to take liquidity or roll their exposure into the new vehicle. Evercore advised on the transaction.

👉 PR News Wire

LGT Capital Partners Secondary Fund Launch

LGT Capital Partners, a Switzerland-based private markets manager, launched its debut credit secondaries strategy. The strategy will invest in LP-led, GP-led, and opportunistic transactions with an emphasis on senior lending. LGT manages more than $5 billion of private credit assets on behalf of the LGT endowment and external clients, spanning direct lending, bank loans, NAV loans, structured credit, subordinated lending, and specialty finance.

👉 LGT Announcement

Macquarie AM’s Infra Credit BDC

Macquarie Asset Management, a Sydney-based asset manager, launched its Infrastructure Income Opportunities BDC. Target sectors include transportation leasing platforms, specialist environmental and waste services, energy transition assets such as battery storage, education facilities, and emergency services.

👉 ACI Announcement

Vistara Growth’s Structured Opportunities Fund

Vistara Growth, a Vancouver-based technology lender, launched the Vistara Growth Structured Opportunities Fund with a $500 million target, anchored by Beedie Capital with a commitment of up to $125 million. The evergreen fund provides growth debt and equity capital to mid to later stage technology companies across North America. Beedie Capital has simultaneously acquired a 50 percent ownership stake in Vistara, having been one of its first limited partners in 2015.

👉 Vistara’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

Have critics focused on the wrong credit boom?

FINRA margin debt reached $1.4 trillion in May 2026, up 54% YoY and more than double since January 2022.

Leveraged ETFs also continue to grow, with U.S. leveraged ETFs having more than quadrupled since 2022.

Explosion in Stock Market Leverage

👉 Carlyle: Have critics focused on the wrong credit boom?

👉 Pimco: Leverage in the system is rising

Speaking of leverage, posted a great piece on the downfall of Leopold Aschenbrenner’s Situational Awareness fund

👉 The downfall of Situational Awareness

Have Bonds stopped working as a shock absorber?

In the Global Financial Crisis, equities fell 57%, and bonds fell 13%. In the COVID crash, equities fell 34%, and bonds fell 15%. Bonds have historically absorbed equity market shocks.

In 2022, equities fell 25%, and bonds fell 24%. The diversification that underpinned 40 years of portfolio construction broke down completely.

👉 Carlyle: Rethinking Fixed Income’s Anchor

Asian private credit fundraising falls to 12-year low

Fundraising by Asian managers has fallen to its lowest level in more than a decade. Only five private credit funds based in Asia closed during the first half of 2026, raising a combined $1.2bn. That compares with 29 funds raising $9.5bn in 2025 and 53 funds securing $20.2bn in 2022.

If the pace of fundraising continues through the second half of the year, 2026 would be the weakest year for Asian private credit fundraising in at least 12 years.

👉 FT Article

Proskauer’s Private Credit Default Index Falls to 2.51%

In companies with EBITDA of less than $25 million, Proskauer observed a modest decrease from 2.3% in Q1 2026 to 1.9% in Q2 2026.

For those with EBITDA of $25 million to $49.9 million, Proskauer observed a modest increase from 3.1% in Q1 2026 to 3.4% in Q2 2026.

Companies with EBITDA equal to or greater than $50 million decreased to 2.4% in Q2 2026 from 3.0% in Q1 2026.

👉 Proskauer Announcement

Manager & LP Updates

Ares explores €3bn secondary sale in its European direct lending fund

The sale relates to €3bn of LP interests in its Ares Capital Europe IV direct lending strategy. If completed, it would rank among the largest private credit secondaries deals completed to date. Talks remain ongoing and may not result in a transaction.

Ares has been an active participant in the sector from both the buyer and seller perspectives. Earlier this year, the firm completed fundraising for its inaugural private credit secondaries strategy, securing $7.1bn of commitments.

👉 PE Wire Report

HSBC sells $25 billion Australian home and personal loan portfolio to Blackstone

The deal announced by the two companies on Friday is reportedly the world’s largest-ever home loan portfolio transaction. The portfolio will be held across the Blackstone Credit and Insurance, Tactical Opportunities and Real ​Estate Debt Strategies funds

👉 Blackstone Announcement

Partnership Updates

PGIM acquires full ownership of Deerpath Capital

PGIM has agreed to acquire the remaining 25% interest in Deerpath Capital, bringing the firm’s ownership to 100%. The acquisition will strengthen PGIM’s direct lending platform by adding Deerpath’s lower middle market capability to PGIM’s existing core middle market and large cap capabilities. The combined businesses will have $16bn in AUM across a team of 55 investment professionals.

👉 PGIM Announcement

T. Rowe Price and Goldman Sachs Asset Management launch a Private Markets Interval Fund.

The new interval fund combines T. Rowe’s private equity with GSAM’s alternatives platform and private credit expertise of Oak Hill Advisors, the private credit platform of T. Rowe Price.

T. Rowe Price and GSAM intend to deliver a range of public-private investment solutions over the coming years

👉 T. Rowe Announcement

3 Insights on 2Q Earnings

Managers have begun releasing their 2Q earnings. Here are a few early takeaways, with more to come as Apollo, Brookfield, Oaktree, and Carlyle report this week.

Ares Grew Its Credit Book Nearly Twice as Fast as Blue Owl

• The four managers grew their credit AUM by nearly $200 bn over the last year.

• At its current pace, Ares would add more credit AUM over the next two years than Blue Owl manages today.

Ares Deployed Nearly As Much as KKR, Blackstone, and Blue Owl Combined

• Ares’ deployment primarily consisted of $12.4bn in U.S. direct lending, $4.4bn in alternative credit, and $4.2bn in European direct lending.

• Blue Owl’s direct lending deployment declined nearly 70% compared to 2Q last year.

Direct Lending Is Losing Share, Not Volume

• Direct lending still raised more capital than any other credit strategy at both Blackstone and Ares this quarter. Blackstone raised $13.3bn for global direct lending, and Ares raised $12.3bn across its US and European strategies.

• Blue Owl shows this trend most clearly: Direct lending has nearly tripled in dollar terms since 2021 and has still lost six percentage points of AUM share.

💰Fundraising News

Slate’s $1 billion Senior Lending SMA

Slate Property Group, a New York manager, closed a $1 billion SMA to expand its senior lending platform. The fund will originate lower-leverage senior secured residential construction and bridge loans through the vehicle, running alongside its SCALE Lending strategy. The SMA targets loans from $40 million to $200 million, priced 300-400 basis points over SOFR, filling a gap below Slate's traditional 500-650 basis point platform.

👉 PERE Report

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

After nearly three and a half years of writing The Credit Crunch, I finally achieved a major breakthrough: my wife was genuinely impressed by one of my newsletters.

Two weeks ago, I wrote about Apollo’s memorable “Don’t mistake the sprinkle for the cupcake” campaign. Apollo’s team followed up with the most convincing piece of marketing yet: a box of cupcakes for me and my friends.

Not wanting to get carried away, but if there is any read-across here, I may have to start writing about private jet finance and see whether Apollo can persuade Perseus Aviation to send a little something my way.

Reading on Outlook? The charts won’t render - Read it online

📕 Reads of the Week

Market Updates

Private Credit's Much Warranted Reset: Three Lies and a Truth

It’s great to see join the Substack community.

As expected, his first post is definitely worth reading.

👉 Private Credit’s Much Warranted Reset

Private Credit Leads the Next Wave of Institutional Allocations

Aviva’s 2026 private market study taps into the views of 500 institutional investors managing $6.5 trillion in assets.

Nearly half of these investors plan to increase private market allocations over the next two years. Infrastructure and Private credit stand out as the asset classes with the strongest net increase intentions.

Real estate shows the weakest allocation momentum. The gap between those investors planning to increase exposure versus those intending to reduce is small, reflecting the impact of higher interest rates, valuation resets, and structural challenges.

👉 Aviva’s Private Market Study

Borrower Defaults Remain Below the Long Run Average

Borrower defaults across the direct lending market remain low at roughly 2.0%, below the historical long-term average of 2.7%.

👉 Blue Owl’s Mid-Year Outlook

Manager & LP Updates

Cox Capital Announces Three BDC Tender Offers

Cox Capital launched a tender offer targeting investors in HLEND, ADS, and ASIF.

Cox is initially looking to acquire $30.5 million, at discounts of 15% to 30% to each fund’s reported Class I NAV as of May 31, 2026.

“Repurchase demand ran well ahead of issuer program capacity again last quarter, and we believe the industry needs a standing utility for the unfilled remainder. For a holder seeking full liquidity, the practical arithmetic is a blended exit: shares accepted by an issuer program are repurchased at or near net asset value, remaining shares can be sold to us.”

John Cox, Chief Executive Officer and Chief Investment Officer of Cox Capital Partners

It’s important to flaf these offers are very small relative to the total universe of investors in these funds. For context, the three funds hold roughly $38–40 billion in aggregate NAV, making the $30.5m tender about 0.1% of the combined NAV.

👉 Cox Capital’s Press Release

BlackRock’s $12Bn Meta Deal

BlackRock is preparing a debt sale of more than $12 billion to help finance a Meta data center project. The transaction combines investors from Global Infrastructure Partners and HPS Investment Partners, who are reportedly offering a single tranche of notes due in 2048, priced at a premium of about 2.875 percentage points over Treasuries (~7.1% all in).

Proceeds from the sale will fund a 1 GW data center campus in El Paso, Texas.

👉 Announcement 1 and Announcement 2

AustralianSuper targets $20bn private credit portfolio

AustralianSuper’s plans to double its private credit portfolio to $20 billion within four years.

As more members move into decumulation, super funds need to think about how portfolios deliver more predictable income streams and support members throughout retirement.

Against that backdrop, AustralianSuper has broadened its approach to credit investing by bringing private credit into its wider fixed income portfolio, allowing investment opportunities to be assessed across public and private markets rather than in isolation.

👉 AustralianSuper News

TD Asset Management launches its global private credit strategy

The fund is integrated into the TD Greystone private markets platform that manages $30 billion of assets. It invests in direct lending (middle market corporate credit), real estate debt, infrastructure debt, and specialty finance markets. It will target an unlevered yield of an 8% to 10%.

👉 TDAM Announcement

Partnership Updates

Wellington, Vanguard, and Blackstone Launch All-Private Fund

The partnership provides Merrill and Bank of America Private Bank clients with a simple access point to Blackstone’s perpetual private markets platform. This includes private credit, private equity, private infrastructure, and private real estate, in a single allocation. They will also explore additional distribution opportunities across the wealth ecosystem over time.

👉 Blackstone announcement

Evercore: Credit Secondaries Are Accelerating

I’ve written about the credit secondaries already this year (Link), but Evercore has since published some excellent data on how this year is playing out.

Below are my key highlights.

👉 Read Evercore’s Full Report

GP-led pricing has held firm,

GP-led transactions continued to price at ~99% of FMV on average, supported by greater access to information, direct sponsor engagement and increased buyer confidence in the ability to underwrite borrower-level performance.

While buyers became more selective during periods of volatility, competition for high-quality, senior-secured portfolios remained strong.

GP-led Credit Secondary Transaction Pricing

(% of FMV Before Post-Reference Date Cash Flow Adjustments)

LP-led Credit Secondary Transaction Pricing

(% of NAV Before Post-Reference Date Cash Flow Adjustments)

The majority of available capital is focused on senior

Buyers typically target 10%-15% levered net IRRs (with transactions generally levered at or around 50%+ LTV).

Second Lien / Mezzanine and Opportunistic strategies target progressively higher returns.

Buyer Target Returns by %

BDC Rising Redemptions Have Yet to Translate into Secondary Sales

Redemption requests have increased more than sixfold since 3Q25

Elevated redemption requests have not yet resulted in meaningful secondary market activity. (See Cox’s Press Release for $30m or 0.1% of BDC Persistent redemption pressure could therefore create additional secondary opportunities over time.

Default rates have remained relatively stable with historical norms

👉 Read Evercore’s Full Report

💰Fundraising News

Tikehau’s $6 billion European Direct Lending VI

Tikehau Capital, a Paris-based alternative asset manager, closed its $6 billion European Direct Lending VI. The strategy has already completed 30 transactions and realised four exits, generating double-digit returns, and is already 44% deployed. The portfolio has an average net debt to EBITDA of 3.5x.

👉 Tikehau’s Announcement

GoldenTree $2.75 bn Fund II

Goldentree, a New York-based manager, closed its $2.75 billion Private Credit Fund II. The Fund has already deployed close to 40% of commitments across approximately 50 investments and is delivering a net IRR of over 20%.

👉 GoldenTree’s Announcement

GCM Grosvenor $1.2 bn Credit Secondaries

GCM Grosvenor, a Chicago-based alt manager, closed its inaugural $1.2 billion Credit Secondaries Fund. The strategy focuses on opportunities across credit sub-strategies, with a particular focus on opportunistic corporate and asset-backed investments.

👉 GCM Grosvenor’s Announcement

NXT Capital $1.8 bn Capital Senior Loan Fund VIII

NXT Capital, a Chicago-based lender, announced a first close of $1.8 billion for its eighth direct lending fund. It finances sponsored middle market companies with earnings of $5 million to $50 million.

👉 NXT Capital Announcement

Dignari Capital Partners $500m from ADIA

Dignari Capital Partners, a Hong Kong private credit investment manager, raised $500 million from ADIA for its APAC real estate private credit strategy. The strategy invests in real estate opportunities in residential, office, retail, student accommodation, serviced apartment, co-living, data centers & logistics.

👉 Dignari Capital’s Announcement

Mercia $580 million UK Real Estate Development Debt Fund

Mercia Asset Management, a UK-listed, multi-asset investment manager, is raising up to $580 million for its UK Real Estate Development Debt Fund. The fund provides institutional investors with access to a specialist private credit strategy focused on UK industrial and logistics developments. The fund will finance experienced real estate developers with secured loans and will focus on opportunities within the industrial and logistics markets.

👉 Mercia’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render - Read it online

📕 Reads of the Week

Market Updates

Green shoots in the exit market

After three years of offloading assets below book value, Partners Group believes that sponsors are back to exiting companies at a premium to what remains in their portfolios. History suggests this is an early-cycle signal rather than a peak, the last two times the uplift turned positive, exit conditions improved for up to 7 years afterward.

👉Partners Group: 2026 Mid-Year

KKR: Base rates are driving fixed-income returns

KKR’s 5-year expected returns building blocks show that returns are predominantly driven by higher base rates, especially for Investment Grade exposures. KKR believes that investors should focus on high-grade credit, durable cash flows, and portfolio construction discipline, rather than reaching indiscriminately for yield or duration.

👉 KKR: An Expanded Toolkit for the Next Investing Regime

European direct lending had its weakest quarter in two years

Direct lenders funded twice as many buyouts as syndicated lenders by count. Direct lending spreads fell to 503 bps. Professional & Business Services displaced Technology as the biggest driver of new deal activity in the YTD.

👉 Pitchbook’s European Credit Monito

9fin’s European Private Credit Rankings

👉 S9fin’s European Rankings here

Hamilton Lane: The Rise of Opportunistic Credit. 👉 Read the paper

Manager Updates

Apollo is investing in Mexico

Apollo plans to deploy up to $20 billion in private credit opportunities in Mexico. It is reportedly in discussions over financing a range of infrastructure developments as well as other debt transactions. More here

👉 Coverage on Private Equity Wire

BCIs Investment Grade Fund.

British Columbia Investment launched its Investment Grade Private Credit Fund. The fund launched with $1.8 billion in direct co-investment commitments and a deployment target of $13 billion over three years. The fund includes investment-grade corporate credit and asset-backed financing, with a primary focus on North America and Europe. More here

👉 BCI’s Announcement

Partnership Updates

Nuveen x CalSTRS

Nuveen announced a strategic partnership with CalSTRS to invest up to $2 billion in sustainable infrastructure through Nuveen’s Energy Infrastructure Credit business. CalSTRS will serve as an anchor investor for the sustainable infrastructure portfolio in the Energy & Power Infrastructure strategy.

👉 Nuveen’s Announcement

Arrow Global in Italy

Arrow Global, a UK-based alternative manager specialising in private credit and real estate, announced the acquisition of Borio Mangiarotti, a leading Milan-based real estate development and management business. Founded in 1920, Borio Mangiarotti has played a significant role in shaping Milan’s urban landscape, with more than 500 completed buildings mainly across Lombardy.

👉 Arrow’s Announcement

Marsh: Private Credit is Insurers’ Defining Allocation Theme

Marsh surveyed 123 insurers around the world, representing over US$4 trillion in total investment assets.

Below are my key highlights.

👉 Read Mercer’s Full Report

More than half of insurers expect to increase private credit exposure over the next 12-24 months

This was a sharp contrast to their 2024 survey, when 37% of insurers reported plans to increase allocations to core fixed income, while just 32% intended to increase their allocation to investment-grade private debt

Private credit demand outstripped fixed income for the first time ever

Interest in private credit is even more pronounced at the larger end of the market, with 81% of insurers with more than US$25 billion in assets under management, planning to increase allocations to private credit compared.

Life insurers (73%) were more likely to allocate than Health (56%) and P&C (40%).

Despite the short liability profiles of Health/P&C players, private credit interest was robust and on par with public investment-grade fixed income.

North American insurers are more likely to allocate to IG Structured Credit (48% of US and 42% of Canadian insurers versus 33% and 23% for European and the UK, respectively), which is unsurprising given the maturity of structured finance markets and conducive regulatory regimes.

Insurers’ concerns about the asset class reflect a broader focus on where the market is in the credit cycle.

A reduction in the illiquidity premium and a weakening in credit discipline are the most prominent concerns, followed by fears of higher default rates.

The market opportunity remains attractive, but selectivity across manager selection and deal due diligence are of the utmost importance.

Beyond credit fundamentals, there is a second tier of concern around regulation, valuation, and the health of adjacent private equity markets. AI disruption seem to be viewed as longer-term issues, rather than immediate barriers to allocation.

👉 Read Mercer’s Full Report

🏃‍♂️Couch 2 Jon Gray

One of the unintended consequences of becoming a dad is that I’ve also acquired a dad bod.

So I’m fixing it.

I’ve started Couch to Jon Gray, the unofficial running club of private credit. The goal is simple. Get fit enough to keep up with Jon Gray.

If you're in private credit and looking for an excuse to run a little more consistently, join us. It doesn't matter whether you're training for your first 5K or your next marathon.

👉 Join Couch to Jon Gray on Strava →

Workouts don’t require creditor consent.

Subscribe now

💰Fundraising News

Sagard $1bn Credit Partners III.

Sagard, a Canadian alt manager, held a first close of $1 billion for its Sagard Credit Partners III. The fund lends senior loans to mid-market companies across Canada and the U.S., focusing primarily on non-sponsored companies. Since inception, Sagard Credit Partners has deployed over US$1.9 billion.

👉 Sagard’s Announcement

IPF $275m Fund IV

IPF, a European Healthcare Growth Debt provider, raised $275 million for its fourth fund. The fund focuses on senior and unitranche debt across European healthcare businesses. IPF typically lends between €10–25 million per company.

👉 IPF’s Announcement

Creation Capital $190m Listed Fund

Creation Capital, a South African investment firm, launched the Creation Yield Fund, a listed private credit vehicle targeting $190 million. The fund was listed on the Cape Town Stock Exchange on 15 July. It will invest in SMEs through non-bank financial lenders.

👉 Creation Capital’s Announcement

Tailwater Capital $170m Royalties Fund

Tailwater Capital, A Dallas-based Energy and Infrastructure manager, announced a final close of $170 million for its second Royalties Fund. The strategy acquires mineral and royalty interests across Tier 1 U.S. shale basins. Roughly half of the capital has been deployed across 30 Permian Basin transactions.

👉 Tailwater’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

Apollo: Don’t mistake the sprinkle for the cupcake.

You may question Apollo’s market sizing numbers, but its marketing is memorable.

👉 Learn how Apollo aims to lead with investment-grade private credit.

📕 Reads of the Week

Market Updates

• Ares on Real Estate

  • “For the first time in a while, mainstream commercial property looks ‘cheap’ on an income basis, relative to most other major asset classes.

  • Not every commercial building screams “bargain.” Yet at the portfolio level, prices have dropped far enough for investors to feel more confident about the risk/reward profile — particularly in sectors with stabilizing fundamentals and falling supply.

  • That distinction matters for those who worry about “trying to catch a falling knife.” In much of the market, the knife is just sticking up out of the floor, waiting for someone to get the handle.

  • 👉 Read the full report

• Avoiding SaaSpocalypse is an underwriting skill for lenders

  • Headline software exposure numbers are becoming less useful on their own.

  • Two private credit managers may report identical software allocations while holding radically different underlying risks depending on the durability of the businesses they finance.

  • 👉 Read more here

• Pimco estimates that $5 trillion in total AI-related capex is expected by 2030.

  • ~40% may need to be financed through debt markets.

  • Demand has been so strong that one lender described it as a “food fight.” 🍔

  • 👉 Learn more

• The weakening of maintenance covenants in private credit

  • An analysis of over 2,000 private credit agreements shows that more than a third of borrowers with maintenance covenants carry headroom exceeding 40%.

  • Not because they have deleveraged, but because covenants were set wide at origination to win mandates in a competitive deployment environment.

  • 👉 Read Allianz’s Fallen Angels report here

Manager Updates

• Mubadala is opening its private credit platform to external investors for the first time as it seeks to attract institutional capital.

  • Mubadala will transfer a $25 billion credit portfolio to Mubadala Capital, allowing the investment business to raise third-party funds alongside capital from its parent for the first time.

  • Mubadala will also commit an additional $4.65 billion to support the platform’s continued expansion.

  • 👉 More here

• HSBC pulls back from private credit. Link

• Temasek will double its private credit allocation by 2031

  • 👉 Read Temasek’s 2026 Strategy Review

2026 Private Credit Rankings

PERE’s Inaugural Credit 100

Infrastructure Investors’ Debt 30

Subscribe now

💰Fundraising News

• Arctos, a KKR-owned manager, closed its $6.2 billion Keystone Partners Fund I. The Keystone platform offers flexible, non-dilutive capital solutions for GPs across private markets and will target relationships with sponsors in North America and Europe. To date, more than 30% of the Fund’s capital has been deployed across 11 sponsors. This includes Keystone’s backing of Hayfin’s management buyout from British Columbia Investment Management Corporation. More here and here

• BlackRock held a first close of $1.7 billion for its European Middle Market Private Debt Fund II. The fund will finance European mid-market companies in defensive industries such as healthcare, business services, and software/technology. More here

• Santander Alternative Investments, the alternatives asset manager of Santander Bank, announced a first close of $170 million for its second Asset Backed Corporate Lending Fund. The fund provides asset-backed corporate financing to SMEs across Europe. The fund is targeting a total raise of €500 million, with a final closing scheduled for June 2027. More here

• Accession Capital Partners, a Poland-based manager, held a first close of ~$100 million for its first direct lending fund. ACP Credit will focus on high-growth small- and medium-sized companies in Central Europe. It will lend between €5-15 million per deal of senior-secured debt. The fund, which has a target of up to €200 million. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• Accredited Investor Insights: Blue Owl vs Oaktree - A Tale of Two Redemption Queues. Read here

• Sovereign funds move from public markets to private credit. Read the FT article

• Rithm Capital: Banks did not exit corporate lending. They repositioned inside it. Link

• Churchill: Mid-market fundamentals are sound. Focus on the fundamentals. Link

• Hamilton Lane: Private credit has consistently outperformed public credit

Direct lending capital is becoming more concentrated and increasingly centered among a smaller group of large, established platforms.

• 👉 Read Baring’s report on Direct Lending here

Manager Updates

• Why Apollo Created Their Onchain Credit Fund. Link

• Apollo: Increasing Transparency and Tradability in Private Credit. Read here

• Ares Alt Credit has over $57 Billion in AUM, with over $85 Billion deployed since inception and $12.7 Billion invested over the last twelve months alone.

  • 👉 Read more here

Partnership Updates

• Coller Capital and Cherry Bank announced a distribution partnership to provide Italian wealth investors access to private credit secondaries. Link

BDC Updates

“Show me the incentive, and I will show you the outcome.” The FT’s deep-dive into Thoma Bravo’s Medallia acquisition. Link

BDC’s Q2 Redemption Wrap Up

Q2 is largely behind us, and most of the largest non-traded BDCs have reported their redemption requests received. Below is a summary of the insights from the quarter.

The headline

• Investors asked to withdraw ~$24bn across the 15 funds we track (See below)

• Sponsors paid ~$8bn

• Aggregate requests rose sharply. Q1 2026 saw roughly $13.9bn requested across the NAV-BDC landscape, with about $7.4bn honored.

Requests were worst at the biggest funds

• Median requests were ~10% of NAV, but the asset-weighted average was 13.5%; pressure is concentrated in the largest vehicles.

• Cliffwater (17%), Blue Owl OCIC (18.8%), Apollo ADS (16.8%), and HPS HLEND (13.3%) received worse than average requests.

All managers capped redemptions

• Unlike Q1, all managers capped the redemption payouts 5%, calling it “operating as designed.”

The most-stressed funds eased

• Blue Owl OCIC (21.9%→18.8%),

• OTIC (40.7%→38.1%),

• Oaktree OSC (8.5%→4.5%)

Brookfield: Seeking Resilience in Turbulent Times

Brookfield published its quarterly outlook to explain how investors can navigate private credit during this market volatility. Below are the key takeaways.

👉 Read Brookfield’s Full Report Here

Non-Accruals in BDCs Remain Low

• Private credit sentiment has shifted from enthusiasm to caution.

• The current market is a consequence of company-specific issues and underwriting standards, not a fundamental break in the system.

• This explains why the dispersion of returns is increasing across lenders, sectors, and vintages.

While PIK Usage Is a Concern, Levels Are Stabilizing, and Non-Accrual Rates Remain Low

• While PIK activity, particularly PIK introduced through amendments, can be a sign of credit deterioration, usage has stabilized recently as borrowers’ ability to pay cash interest is improving.

• Market stress has been more pronounced among smaller and middle-market borrowers, particularly companies in the $25–50 million EBITDA range, while larger issuers have generally remained more stable.

Direct Lending Spreads Remain Attractive

• One of the inevitable consequences of a market dislocation is that it creates opportunities in distressed assets, and this is no exception.

• This is particularly evident in sector-specific areas that have borne the brunt of negative sentiment, but is also a result of refinancing pressure.

• More than $1.3 trillion in loans are maturing in 2026; public markets are likely to absorb much of this volume, but may be less receptive to more complex credit situations, creating opportunities for private lenders

There are four key themes driving the private credit outlook over the next few months

1. Dispersion is key. There will be increased dispersion among private credit manager returns. To put it simply, this is a credit pickers’ market.

2. Yields remain attractive. The private credit premium—in other words, the return relative to public credit investments—has compressed in recent months, but it has not disappeared. Yields remain compelling relative to public markets.

3. Selection-driven returns. Performance will increasingly depend on a strong focus on borrower quality, underwriting discipline, and the structuring and sourcing of loans. Direct lending is and remains a core allocation of investors’ fixed-income portfolios, but sustained performance will come from lenders that emphasize selectivity and disciplined underwriting, with a focus on risk mitigation.

4. Opportunities are emerging. One of the inevitable consequences of a market dislocation is that it creates opportunities in distressed assets, and this is no exception. This is particularly evident in sector-specific areas that have borne the brunt of negative sentiment, but is also a result of refinancing pressure. More than $1.3 trillion in loans are maturing in 2026; public markets are likely to absorb much of this volume, but may be less receptive to more complex credit situations, creating opportunities for private lender.

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💰Fundraising News

• Hayfin, a UK-based manager, closed its $17.2 billion Direct Lending Fund V. The fund lends senior‑secured loans to European middle‑market and upper‑middle‑market businesses. Since it was founded in 2009, Hayfin has invested over €55bn of capital across more than 500 portfolio companies via its private credit strategies. More here

• Ares is raising its second Asia private credit fund focused on financing leveraged buyouts across the Asia Pacific. The fund, Asia Direct Lending II, could reportedly be larger than its predecessor, which raised $1.7bn, although final details have not yet been set. More here

• RGreen Invest, a Paris-based manager, closed its $572 million Infrabridge IV fund, more than doubling the size of its previous vintage. The infrastructure debt fund provides short-term senior debt/bridge financing to energy-transition infrastructure projects in Europe, focusing on the lower-mid market. Its portfolio spans a broad range of sectors, including geothermal energy, biomethane, energy storage, hybrid solar and wind projects incorporating battery storage. More here

• Incus Capital, the Madrid-based real assets private credit specialist, announced a second close of $640 million for its European Credit Fund V. The fund provides asset-backed financing to mid-market businesses across Europe. Investments completed to date include financing for prime residential development projects, logistics assets, the hospitality industry, energy transition infrastructure, and residential repositioning opportunities. The fund typically lends between €25 million and €60 million per company. More here

• Eiffel Investment, a Paris-based manager, announced the first closing of $570 million for its Impact Debt III. The fund provides financing to European mid-sized companies, where the capital is used to support one of three impact objectives: reducing temperature impact, preserving ecosystems, or promoting diversity. It will invest in 40 to 50 European companies. More here

• Orbit Capital, a Czech Republic-based manager, announced a second close of $122 million for its second Growth Debt Fund II. Orbit Capital is a growth-stage investor managing over €200 million in AUM through venture debt and growth equity vehicles. The firm has a primary focus on technology leaders in CEE, while remaining actively engaged in opportunities across the DACH region and broader European markets. Tickets range from €3 million to €15 million. More here

• TLG Capital, a London-based emerging markets manager, announced the $120 million second close of its Africa Growth Impact Fund II. The fund finances African SMEs through local banking partners, with each loan structured for a longer tenor than African banks typically provide and backed by a guarantee from the originating bank. Since its $75 million first close in April 2025, the fund has invested in nine SMEs across seven countries and seven sectors, with debt facilities ranging from $5 million to $15 million. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

That line from Ares’ Alternative Credit is one I often think about when writing these quarterly pieces.

It’s easy to get pulled into media narratives, anecdotes, individual portfolio workouts, or whatever controversy is dominating the week. Taken together, they often leave us with a distorted view of the overall market.

So once a quarter, I try to step back and look through the telescope: where is capital really flowing?

That means analysing every fundraising announcement I’ve tracked during the quarter. The dataset is not perfect, but it is good enough to reveal the bigger picture. If you think the conclusions are wrong, I’d be happy to be challenged.

Redemptions have dominated the conversation for the past six months

It feels like everyone has been so focused on redemptions that we forgot the other side of the equation, fundraising.

Private credit managers raised $262 billion in H1, 30% more than last year. That was not the outcome I expected given how poor Q1 was. The growth was entirely driven by Q2, when managers raised $173 billion, accounting for nearly 70% of H1 fundraising.

Stepping back, several recurring themes continue to stand out:

• Fewer funds are raising in the market.

• The largest managers are taking most of the capital.

• Credit secondaries set all time highs.

• Asia continues to outperform.

But there were also a few surprises:

• Fund sizes are getting larger.

• Direct lending is back.

• Europe is declining.

Let’s look at each of these in more detail.

Capital is concentrating at the top.

👉 This continues to be one of the most important takeaways

The average size of the top 5 funds has grown every year for the last 3 years.

• $10.6bn (2024)

• $11.0bn (2025)

• $14.3bn (2026).

Despite all the redemption noise, mega-managers are raising larger funds than ever before. More strikingly, there were three times as many funds above $10bn as there were last year.

At the other end of the market, smaller funds are struggling. The number of sub-$1bn fundraises fell 40% year-on-year, and the capital raised by those funds declined 30%.

This is best shown in the graph below. Capital concentration has reached the highest level I’ve recorded. In short, LPs are focusing on the largest managers.

To understand why capital is concentrating around the largest managers, it’s worth listening to Alan Waxman on Invest Like the Best and reading WTF Is Going On In Private Credit? Both help explain the rise of the factory model.

The Top 10 Funds Raised 60% of the Capital…

1. Barings’ $19 billion Global Direct Lending Strategy

2. Ares’ $12.7 billion Pathfinder Asset-Based Finance Strategy

3. Crescent Capital’s $10.8 billion Fourth U.S. Direct Lending Fund

4. Blackstone’s $10 billion Capital Opportunities Fund V

5. Ares’ $9.8 billion Special Opportunities Fund III

6. Antares Capital’s $8.5 billion Senior Loan Fund III

7. Guggenheim’s $8.4 billion Private Debt Fund IV

8. 17Capital’s $7.5 billion Credit Fund 2

9. Adams Street’s $7.5 billion Private Credit III

10. Apollo’s $6.5 billion Hybrid Value Fund III

The US took a record share of capital

North American funds raised 61% of the capital in H1 2026, up from 52% a year ago and reaching the highest market share I have ever recorded. The concentration was mainly driven by the mega-managers.

European fundraising, meanwhile, fell 35% YoY, a massive retreat for a region that has been a steady third of the market.

Asia continued to outperform, with 12 funds raising $7.5 billion in H1. This was a 5x increase in 2025. The clearest sign of this momentum is fund size: KKR, RRJ, and Varde each raised Asian vehicles of more than $1bn.

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📕Nick’s Top Articles for Q2

1. Diameter: WTF Is Going On In Private Credit?

2. The State of Private Credit in Q1 26

3. Sixth Street: The Rise of the Factory Model

4. Milken: Private Credit’s Dispersion Has Been Abnormally Compressed

5. Sona’s Honest Assessment of Private Credit

Institutional Investors are Coming Back to Direct Lending

This was the second biggest insight of the quarter: Direct lending is still very much alive. Five of the top 10 funds were direct lending vehicles. Yes, the number of direct lending fundraises fell 35% year-on-year, but the funds that did close were twice as large on average.

Opportunistic credit remains one of the clearest growth areas, with fundraising doubling year-on-year. While many strategies saw fewer funds close, the number of opportunistic fundraises rose for the third year running.

For more on this trend, see Dispersion Is Back

Credit secondaries volume has set new highs every year since 2020. Credit secondaries fundraising is up 6 x year-on-year, with Ares $7 billion raise leading the way.

For more on this trend, see Solving Private Credit’s DPI Problem.

🏆 Nick’s Funds of the Quarter

• Barings $19 billion Global Direct Lending Fund

It was only two years ago that Barings lost a meaningful portion of its team to Nomura. They’ve now managed to raise the largest fund I’ve recorded in 2026, despite this setback and despite being a direct lending fund.

• Stepstone’s $3.1 billion Structured Solutions Vehicle

Secondaries are going to reshape the private credit landscape over the next five years, and I expect Stepstone to play a key part in this.

• Crescent Cove $446 million Fund IV

While the “SaaS apocalypse” took most of the media attention, Crescent Cove showed that specialist managers can still raise capital in less obvious corners of the market.

Crescent Cove lends to high-growth technology businesses, including businesses operating in defense tech, autonomous driving, AI infrastructure, and cybersecurity.